The City Council on Tuesday unanimously approved a proposal to create four task forces…
The Valero Benicia Refinery in Benicia on May 8, 2025, which processes up to 170,000 barrels of oil a day, making gasoline, diesel and other fuels for California. Valero plans to shut down the Benicia refinery by April 2026, citing high costs and strict environmental rules. The Solano County city is proposing task forces to address the potential fallout of a Valero refinery closure. (Beth LaBerge/KQED)
Benicia city leaders are taking initial steps to prepare for the likely closure of the Valero refinery, a month after the oil giant announced plans to cease operations at its sprawling Solano County facility within a year.
The City Council on Tuesday unanimously approved the mayor’s proposal to create four economic and community-focused task forces to “understand potential economic impacts, develop strategies to mitigate those impacts and plan for the future.”
The groups are intended to ready the small North Bay city for the potentially seismic fallout if Valero makes good on its intent to cease operations at the refinery by April 2026.
Valero is Benicia’s largest employer and accounts for almost 20% of its tax base.
“I think we are taking some serious steps trying to address as many of the known and unknown facts that we have,” said Mayor Steve Young, who tapped specific council members to head each of the groups, and said no one attending the meeting voiced any opposition to the plan. “We’re basically trying to utilize the respective strengths of the council members, all of whom have significant things that they can bring to the table.”
Benicia Mayor Steve Young sits in the City Hall offices in Benicia on May 8, 2025. (Beth LaBerge/KQED)
That includes a group to address economic recovery options for the city as it braces for a massive budget shortfall, and another to collaborate with nonprofits, schools and local sports leagues that have long relied on Valero’s donations, and now face losing their primary funding source.
“We’re in a situation where we’re going to have $10 [million] to $12 million less than last year,” Young said. “The hit on the community is going to be severe. My main job is to ease that transition as much as we can.”
A third group would map out next steps for the city’s port and the many businesses in its industrial park that for decades have supplied equipment and services to Valero, while a fourth would tackle plans to redevelop the 930 acres of land the company owns.
Oakland-based Signature Development Group recently announced it was in talks with Valero to redevelop the land on the eastern side of the city into housing and commercial property.
Doing so, however, would require a costly remediation effort — one Valero is legally required to undertake— that would likely take a decade to complete before any development takes place. During that time, the city would receive no revenue, Young said.
Valero has taken the land off the market, which implies that it’s given Signature the exclusive right to negotiate for it, he said.
“So [Signature’s] got a year to sort of do their due diligence, look at redeveloping options and then at the end of that year presumably buy the site and then move forward with who knows what kind of development options,” Young said.
He noted, however, “there are so many unknowns that probably things will pivot a month from now, three months from now. Six months from now, we might be doing something different.”
Councilmember Terry Scott, whom Young asked to help lead the redevelopment group, said his priority is to focus on the 400 acres of the Valero property that haven’t been used for manufacturing and processing operations. That land wouldn’t require the same degree of remediation, and could potentially be turned into housing and other uses within several years.
As for the refinery property, he said, the city would need to court industries that could operate on land that will remain fairly contaminated, even after the remediation process.
A fire at the Valero Oil Refinery in Benicia, California. The fire comes just weeks after Valero executives announced they were considering closing the sprawling refinery by next April. (Courtesy of Bay Area Air District)
“There’s gonna be some pretty bad brown spots there,” said Scott, who is hoping to attract less-polluting industries to replace the refinery. “This will not be growing gardens, and having front lawns and having kids running across it.”
Valero’s announcement in mid-April to “idle, restructure or cease” operations at the refinery that it’s operated since 2000, caught Young and other city officials completely off guard. The company cited California’s tough “regulatory and enforcement environment” as the main driver behind its move to consider closing the sixth-largest refinery in the state, which makes up about 9% of the state’s total crude oil capacity.
The news dropped less than two weeks after the City Council unanimously approved modest rules to increase their oversight of the refinery, and some six months since regional and state air regulators fined the company a record $82 million for secretly exceeding toxic emissions standards for more than 15 years.
Although that money is reserved for future public health initiatives, Young said he is pressing regulators to consider “a lenient and liberal” interpretation of what they mean by public health, so that Benicia leaders may use those funds “to offset some of the losses that the city’s going to see.”
Young also hopes he can help broker a deal with Valero and state officials to convince the company to continue operating the refinery for at least a few more years. He additionally intends to make the case that closing the facility next year could pose a serious national security threat, as it’s currently the sole provider of roughly 50 million gallons of jet fuel to nearby Travis Air Force Base, which it delivers via a direct pipeline.
“The threat of no jet fuel for Travis potentially puts the future of the whole base at risk,” he said. “If we could get three years instead of one year, that certainly eases the transition period for the city and gives us a little bit of breathing room to try to stabilize the financial hit that we’re going to see, and at the same time, plan for the eventual closure.”
Young said members of the City Council and community leaders have so far been generally supportive of the proposal to form task forces as part of the city’s abrupt effort to begin processing and planning for an uncertain future. People, he said, are glad to see that the city is at least trying to create a blueprint.
“Even though a lot of it is out of our hands, we are addressing it to the best of our ability so far,” he said.
Scott called Valero’s announcement last month “a warning shot” that he hopes will galvanize the community into action.
“We cannot let weeks or months go by without really looking at the future and saying, what are the things that we can do?” he said.
Extensive interviews with Benicia Mayor Steve Young and others
Benicia Mayor Steve Young drives by the Valero Benicia Refinery in Benicia on May 8, 2025, which processes up to 170,000 barrels of oil a day, making gasoline, diesel and other fuels for California. The refinery accounts for nearly 20% of the city’s tax base, and its expected shutdown could have a catastrophic impact on the city’s financial health. (Beth LaBerge/KQED)
Benicia Mayor Steve Young poked at his shrimp Louie salad as he glanced wistfully out the window of a local seafood restaurant perched on the banks of an unusually serene stretch of the Carquinez Strait.
“I’ve had better months. Let’s put it that way,” he said.
Young, 73, looked grateful for the lunch break. He has been deep in damage control mode since last month, when Texas-based oil giant Valero, the city’s largest employer, announced plans to “idle, restructure or cease” operations at its Benicia refinery within a year.
In a recent earnings call, Valero CEO Lane Riggs cited California’s tough “regulatory and enforcement environment” as the main driver behind the company’s intent to close California’s sixth-largest refinery, accounting for about 9% of the state’s total production.
The refinery makes up nearly 20% of Benicia’s tax base, and shutting down the facility, which dominates much of the eastern side of this small, relatively affluent Solano County city, could have a catastrophic impact on the city’s financial well-being.
“We’re in a situation where we’re going to have $10 (million) to $12 million less than last year,” said Young, a tall, gray-haired man with a gravelly voice. “The hit on the community is going to be severe. My main job is to ease that transition as much as we can.”
Benicia is known as a “full-service city,” he said, “which means we do every conceivable municipal service there is.” That’s part of what makes this community of well-kept yards and century-old homes feel so safe and pleasant, with its abundance of parks, libraries and subsidized artists’ studios.
Benicia Mayor Steve Young sits in the City Hall offices in Benicia on May 8, 2025. (Beth LaBerge/KQED)
But a decent portion of those amenities are funded, in part, by the property taxes Valero pays the city — leaving Young with the unenviable task of recommending which services to potentially cut, whether it’s the public pool, the summer concert series or even the dog poop bag dispensers in the parks.
“Anything we cut has a passionate base,” Young said, grimacing slightly in anticipation of the inevitable budgeting battles to come.
Shutting down the refinery, he added, would also be a major blow to the hundreds of residents who work there, not to mention the restaurants, hotels and businesses in the city’s industrial park that provide services to the facility and its workers, as well as the many local nonprofits that have long depended on Valero’s donations.
Valero didn’t respond to KQED’s multiple requests for comments for this story.
Young rose to local political prominence nearly a decade ago by pushing back against the company’s strong influence in a place many here consider a “refinery town.”
Months after Valero was hit with a record $82 million fine by air regulators, the company said it would ‘idle, restructure, or cease operations’ in Benicia by the end of April 2026. (Craig Miller/KQED)
In 2016, Young, a former local government administrator, stepped out of retirement to join the planning commission, where he successfully led the opposition against the company’s proposal to start bringing in crude oil by rail.
At the time, Valero was accustomed to being “the big dog in town,” and expected the City Council to rubber stamp the proposal, much like it had for many of the company’s other requests, Young said.
“They had been joined at the hip,” he said. “Valero was used to having things slide through.”
So it came as a shock to the company when the City Council voted down the proposal, citing major public safety and congestion concerns about having a constant flow of trains bringing volatile materials through town.
“That was a big deal. It kind of set the tone,” said Young, who went on to win a seat on the Council later that year. He successfully ran for mayor in 2020, despite intense opposition from Valero, which spent some $250,000 in attack ads and campaign mailers opposing him.
Two years later, voters elected two additional candidates to the five-member Council — Kari Birdseye and Terry Scott — who, like Young, pledged to stand up to Valero when its actions compromised public safety.
The Valero Benicia Refinery in Benicia, on May 8, 2025, processes up to 170,000 barrels of oil a day, making gasoline, diesel and other fuels for California. Valero plans to shut down the Benicia refinery by April 2026, citing high costs and strict environmental rules. (Beth LaBerge/KQED)
But Young and his allies now find themselves in the awkward position of beseeching the very company they’ve challenged to stick around — at least for a few more years — to buy the city more time to prepare.
“We need to get moving on this quickly, because 12 months is not a long time given the severity of the economic impact,” Young said, acknowledging that his bargaining chips are limited.
One option, he said, is appealing directly to the state to ease some of the regulations that Valero finds so burdensome. Young appreciates California’s efforts to address climate change, but he questions the practicality of the current approach, especially when it results in frontline communities like his losing their refineries and being forced to suddenly fend for themselves.
“I understand these are necessary steps going forward,” he said. “But the state passes many laws without any consequence or understanding of how they’re going to be implemented and who’s going to have to pay for it. That’s, I think, part of my frustration as a local official.”
Young said he intends to make the case that closing the refinery could pose a national security threat, as it’s currently the sole provider of jet fuel to nearby Travis Air Force Base, which is delivered via a direct pipeline.
“If that is stopped, what does that mean to the base?” Young said. “Travis uses an amazing amount of fuel to fly all their planes, much more than can be easily replaced and certainly not replaced within a year. So I think that this becomes a matter of real concern to the defense department.”
There’s also a possibility that the 900 total acres of land Valero owns, which has unobstructed views of the scenic bluffs and straits that funnel into the mouth of the Sacramento Delta, could be redeveloped into housing and commercial property. Oakland-based Signature Development Group recently announced it was in talks with the company.
Doing so, however, would require a costly remediation effort — one Valero is legally required to do — that would likely take a decade to complete before any development takes place, Young said.
“This would be a good long-term development — to have an outside entity pressing Valero to do the remediation,” Young said. “But in the meantime, we’re not going to have any money at all coming in.”
The city may ultimately need to ask for another tax increase, Young said — a request he believes voters in the city, many of whom have lived here for decades and pay low property taxes, will approve.
A mural depicts downtown Benicia in the city on May 8, 2025. (Beth LaBerge/KQED)
“It may come down to that,” he said. “I don’t think we’re going to be able to cut our way to $10 (million) or $12 million and maintain any level of similar services.”
Downtown Benicia has a quaint, small-town feel that belies its proximity to San Francisco, less than 40 miles south. Drivers turning off Interstate 780 are greeted by a sign for an American Legion rib cookoff before passing a large white gazebo in a small park on the edge of downtown. The main drag is filled with restaurants, cafes and galleries.
A monument in a nearby park reminds visitors that Benicia was once the state capital — though only for a year, in 1853.
From many vantage points in this charming city of some 27,000 residents on the outer edge of the Bay Area, it’s easy to forget the refinery is there at all, its stacks, holding tanks and billowing steam hidden from view.
Valero, which has operated the nearly 60-year-old Benicia refinery since buying it from Exxon in 2000, dropped its bombshell announcement on April 16, roughly six months after regional and state air regulators fined the company a record $82 million for secretly exceeding toxic emissions standards for more than 15 years.
Last month, city leaders unanimously approved modest rules to increase their oversight of the refinery, despite staunch opposition from the company.
“ If you keep poking that golden goose, one day it’s going to fly away,” Mark Hughes, a former council member, said during a packed Council meeting in March ahead of the vote. “And that’s not a threat, that’s not any inside information I have about Valero. It’s just the likely outcome of a company that constantly feels that it’s being pushed away.”
The timing of Valero’s closure announcement, less than two weeks later, sparked speculation that the industrial safety ordinance was the final straw for the company.
Attorney Terry Mollica stands outside his home in Benicia on May 8, 2025, near the Valero Benicia Refinery. (Beth LaBerge/KQED)
According to Terry Mollica, who helped lead a group of residents that pushed for the city’s new safety rules, the ordinance is a significantly watered-down version of the original. It merely requires the company to conduct internal reviews following safety incidents and disclose findings to the city, which can then request upgrades if public safety is at risk.
“The ISO, at least the version that was adopted, couldn’t possibly require them to do that much that they would close down a $1.2 billion facility,” he said. “Now, it’s possible that that was part of the reason, but that scenario only makes sense if there was something very seriously wrong with the refinery that they didn’t want disclosed.”
There are serious risks that come from living with a refinery in your backyard, Mollica said, noting the exposure to toxic emissions.
“It’s a great little town and a great little community, and we love living here. But that is the one negative about being here,” he said.
That risk was underscored last week when a major fire ignited at the facility after part of a furnace stack broke off and struck other equipment in a gasoline production area, according to the company’s incident report. The fire sent black plumes of smoke into the air and prompted a brief shelter-in-place order for surrounding neighborhoods.
Attorney Terry Mollica holds a photo on his phone at his home in Benicia on May 8, 2025, of a flare at the Valero Benicia Refinery seen from his neighborhood. (Beth LaBerge/KQED)
The incident followed a multi-day blaze in January at PBF Energy’s Martinez Refining Co., just across the strait.
“I spend a lot of time in the garden, and when these incidents occur, you’re not allowed to go outside. You just don’t know what you’re being exposed to. The history of it has been bad.”
But Danny Bernardini, business manager of the Napa-Solano Building & Construction Trades Council — a group of 15 unions that represent hundreds of boilermakers, laborers, plumbers and steamfitters, many of whom work intermittently at the refinery — thinks the company grew weary of the regulations “pile-on.”
“California is the toughest place to have a refinery. And so at some point they have to say, ‘Does this make business sense for us to stay in California or not?’” Bernardini said. “And I think their announcement was them saying, ‘We can’t do business like this.’”
The facility’s likely closure comes amid a growing exodus of traditional oil refiners in California, raising serious concerns about potential gas shortages and rising prices at the pump.
Apprentices work on a project at the Heat and Frost Insulators Local 16 Training Center in Benicia on May 9, 2025. The training center teaches apprentices to install and maintain insulation systems that conserve energy and protect equipment, skills that are essential for safe and efficient operations in refineries and other industrial facilities. (Beth LaBerge/KQED)
Phillips 66’s refinery in Rodeo and Marathon’s facility in Martinez both recently converted operations to biofuel production. Phillips 66 also plans to close its Los Angeles-area refinery — the seventh largest in the state — later this year. And Valero executives recently hinted they may soon consider “strategic alternatives” for the company’s only other California refinery located near Los Angeles.
“Until there’s an alternative to refineries, we need to keep them,” Bernardini said. “And yes, they need to be safe. They need to not pollute. They need not have incidents. But at the same time, they’re a necessary thing right now because everybody drives in a car.”
He said the workers in his unions are highly skilled technicians who have relied on consistent jobs at the Valero refinery, but many of their skills don’t transfer to other industries.
“Refinery work is very specific to their trade,” he said.
That specialization is on full display at the Heat & Frost Insulators Local 16 apprenticeship facility in Benicia, just down the road from the refinery’s towering stacks.
Coordinator Jonathan Blaine stands in the workshop at the Heat and Frost Insulators Local 16 Training Center in Benicia on May 9, 2025. (Beth LaBerge/KQED)
“For any pipe, duct or vessel that has to maintain a specific temperature, we’re going to insulate those to stay that temperature within the pipe,” said Jonathan Blaine, the apprenticeship coordinator, as about a dozen apprentices practiced on piping models in the classroom.
Apprentices, he said, have to train for 8,000 hours before contractors can hire them. It’s difficult, sometimes dangerous work, but it pays upward of $80 an hour.
“Everybody says, ‘Hey, you need to go to college. That’s the only way that you can afford to live.’ And then you find out about the union building trades,” he said. “It offers a really good career path. You just have to work hard for it.”
But much of that is dependent on the refineries staying open.
“There’s a lot of man-hours that are worked in refineries throughout the year,” he said. “There’s been a lot of questions, and at this point, we don’t really know exactly what’s going to happen.”
Christian Ochoa, an apprentice from Fairfield specializing in installation, said he chose the career path because it would allow him to provide for his two kids and “live a comfortable life” without having to hold down multiple jobs.
Tyler Fleming (left) and Levi Humphries, both 5th-year apprentices, work on a project at the Heat and Frost Insulators Local 16 Training Center in Benicia on May 9, 2025. (Beth LaBerge/KQED)
Ochoa said he’s confident he’ll still be able to find work at power plants and other industrial facilities if the refinery closes. But he said the news is still disheartening.
“I can see this whole town collapsing, man. A lot of people from around this area work there,” he said. “Less work for us.”
Young is more optimistic, despite the severe budget shortfall that the city will likely soon be forced to confront. If Valero skips town, there will no doubt be some short-term pain, he acknowledged. But that may be worth the price of no longer having to live in the shadow of a refinery.
Losing the refinery would force Benicia to diversify its economy, which “would certainly be a healthier thing for the city,” Young said.
“We have the highest rate of asthma and the highest rate of cancer in Solano County, which is not something that you would typically expect in a city that also has the highest income and the highest education levels,” he said. “So I think from a health perspective, we would be better off.”
May 5 – The fire comes just weeks after Valero executives announced they were considering closing the sprawling refinery by next April. (Including quotes by Larnie Fox and Pat Toth-Smith of Benicia.)
Benicia Contends With Valero Refinery Closure
We talk about the possible closure of the Benicia Valero refinery and what it means for our region. (Guests include Benicia Mayor Steve Young)
‘Shocking News’: Valero Announces Plans to End Operations at Benicia Refinery
Apr 21 – Last week, the oil giant Valero announced that it will “idle, restructure, or cease operations” at its Benicia refinery that employs more than 400 workers. (Including comments of Benicia City Councilmember Kari Birdseye.)
Oil Giant Valero Looks to Shutter Troubled Bay Area Refinery. It’s ‘a Big Surprise’
Months after Valero was hit with a record $82 million fine by air regulators, the company said it would ‘idle, restructure, or cease operations’ in Benicia by the end of April 2026. (Quotes by Benicia Mayor Steve Young and Benicia City Councilmember Kari Birdseye.)
Benicia City Council gives preliminary approval to an ordinance that could create a citizen’s oversight panel and allow the city to issue fines for safety and air-quality violations. (Quotes by Benicia attorney-activist Terry Mollica, Benicia City Councilmember Kari Birdseye and several other Benicians.)
In 2006, James Feldermann got hired as a trainee at a refinery in Martinez, California, in the Bay Area. It was hard work, with 12-hour-minimum shifts, but Feldermann came to excel at it. He learned how to isolate pipes and vessels, load railcars with molten sulfur and ammonia, and helm an industrial control panel. In time, he rose to the position of head operator at the Marathon Petroleum site. The job paid well, and he enjoyed it. He expected to stay until retirement.
On a Friday afternoon in July 2020, Feldermann was abruptly summoned to an all-hands Zoom meeting. While some of his colleagues struggled to get the audio to work, Feldermann received a phone call from his union representative. “I didn’t actually hear management tell us that they were laying us off,” he told me. The plant was being shut down, as the rise of work-from-home and the spread of electric vehicles depressed Californians’ demand for gasoline. Feldermann and his co-workers would be out of a job in 90 days.
The United States is embarking on an epochal transition from fossil fuels to green energy. That shift is necessary to avert the worst outcomes of climate change. It also stands to put hundreds of thousands, perhaps millions, of people like Feldermann out of work. The result could be not only economic pain for individual families, but also the devastation of communities that rely on fossil-fuel extraction and a powerful political backlash against green-energy policies.
A pathbreaking new study[BenIndy editor: see indent below] shows just how real the damage could be, absent policies to soften the economic blow. Virginia Parks, a professor at UC Irvine, and Ian Baran, a doctoral student, tracked the consequences of the Marathon shutdown in near-real time, getting more than 40 percent of the workers to return surveys and a smaller group to sit for interviews. They found that, more than a year after the shutdown, one in five Marathon workers was unemployed. Their earnings had declined sharply, with the median hourly wage of employed workers plunging from $50 to $38. Some workers were earning as little as $14 an hour. And those new gigs came with more dangerous working conditions.
To prevent other workers from experiencing the same, the Biden White House has promised to pursue a “just transition,” employing policies to ensure “new, good-paying jobs for American workers and health and economic benefits for communities.” But the green-energy transition is already underway. And it is not clear that it will be just.
The legendary American union leader Tony Mazzocchi pioneered the concept of a just transition a half century ago. Some industries are too toxic for society, he argued. But to shut them down in a way that punishes the workers in those industries, or the places where those industries are concentrated, would be unjust.
Just-transition policies are not merely about bailing out blue-collar folks. They are meant to defray the cost of having whole communities fall into persistent economic distress: a loss of social cohesion, people living shorter and sicker lives, the rise of “deaths of despair,” the growth of right-wing populism. They are also meant to generate political support for green policies, or at least dampen any backlash. Without them, “you risk dissuading future efforts that are for the societal good,” J. Mijin Cha, an environmental-studies professor at UC Santa Cruz, told me. “If we’re doing things that are for the benefit of society but screw over a bunch of people, that’s not a societal good.”
These policies have worked. The Ruhr region in western Germany, for example, once produced coal, iron, and steel, with extractive and heavy industry employing a majority of the region’s workers. The German government, labor unions, and industrial leaders came to a series of agreements to diversify its economy, providing payments for displaced workers and making investments in service-and-knowledge businesses. Employment in coal mining in the region went from 473,000 in 1957 to zero by the end of 2018. The area lost nearly 1 million production jobs but gained nearly 1 million service jobs.
Yet it is hard to identify many, if any, just transitions in the United States. Appalachia lost its coal jobs and gained an opioid epidemic. Detroit deindustrialized and fell into poverty and disrepair. The decision to open up trade with China sent millions of American manufacturing jobs overseas, and policy makers did little to create any in their place. Now the planned obsolescence of the fossil-fuel industry threatens to create new Rust Belts in regions economically dependent on extraction, such as the Permian Basin, in Texas, or the Bakken Formation, in Montana and North Dakota.
The problem is threefold. First, the United States does not invest heavily in industrial policy or place-based policy compared with some of its rich-country peers, though the Biden administration has started to push billions of dollars into both. If coal is leaving a region, Washington historically is not sending anything else in. Second, the country has lower rates of unionization and a much thinner safety net than other wealthy nations, making workers more vulnerable to the effects of mine closures and plant shutdowns. Third, the Republican Party tends to reject the premise that the country needs to move away from fossil-fuel production at all, making them a weak partner in setting up just-transition plans.
No wonder the Marathon shutdown went the way it did. John Bayer, a safety specialist, lost his job at the site, as did his two brothers. He told me that he was not offered any form of government help, aside from unemployment insurance. Bayer, who has two kids, sent out about 50 applications and received just two callbacks. He ended up at an agriscience firm that nearly matched his Marathon wage but provided fewer opportunities for overtime. “I ended up with a $60,000-a-year pay cut,” he told me.
James Feldermann wound up taking a job based in Reno, Nevada, for $17 an hour less than he was making at Marathon. He rented a small studio apartment there and spent months driving 200 miles back to the Bay Area every weekend to see his wife and son.
Both the state of California and the Biden administration are in the process of developing plans for a just transition to green energy. Those plans were too late for the Marathon employees. Many labor leaders, academics, and politicians think those plans are almost certain to be too little for fossil-fuel workers losing their jobs in the near future.
On paper, the challenge seems straightforward. The United States has roughly 120,000 oil-and-gas workers and 40,000 coal miners. The green-energy sector is adding at least that many jobs every year. Supply, meet demand. Why not create a job-matching service for those laid off; provide them with wage subsidies, transition assistance, and relocation funds; and watch the country’s emissions turn from smoke-gray to vapor-white?
A few reasons. For one, fossil-fuel companies employ about 1.7 million workers in the U.S., not 160,000, once you factor in all the labor not directly involved in extraction and refining. It takes a lot of workers to transport fuel, manufacture secondary products from it, and power communities with it. And it makes little sense to transition many of those workers directly into green-energy jobs. Oil-and-gas gigs tend to pay far more than solar and wind do. And workers in extractive industries tend to develop valuable, specialized skill sets, as Feldermann did. Their technical chops would be wasted selling rooftop solar systems, and their salaries would get cut in half.
The government also faces the challenge of supporting whole communities dependent on fossil-fuel extraction, not just individual workers. “Fossil-fuel companies tend to be dominant employers where they are located,” Michaël Aklin, a professor of economics at the École Polytechnique Fédérale de Lausanne, in Switzerland, told me. “When they shut down, the central node in that local economy disappears.” The consequences ripple out to the businesses and institutions that rely on the money those workers used to spend and the taxes they used to pay.
The crux of the Biden administration’s plan for a just transition thus far is a policy granting tax incentives to businesses investing in “energy communities.” In the long term, that might encourage companies to locate warehouses and jobs in the places where oil, gas, and coal facilities are closing. But incentives are, well, just incentives. What if private businesses choose not to locate in certain parts of Louisiana or North Dakota, despite the tax breaks on the table? What if they create jobs years after a shutdown has done its damage? What happens to places where no business wants to invest?
At this point, neither Sacramento nor Washington has developed a robust plan to reach out and help oil-and-gas workers one by one. That’s a necessary component, UC Irvine’s Virginia Parks told me. The government, she argued, should provide financial support to cover the gap between workers’ pre- and post-layoff wages, as well as aiding workers close to retirement. Legislators should set up programs to certify the workers’ skills so that outside employers can see just how qualified they are. Finally, the government should provide retraining and job-match services.
Last week, Tracy Scott, the president of the United Steelworkers Local 5, the union representing the Marathon employees, drove me around the closed refinery complex. It sits on emerald-green marshland near where the Carquinez Strait empties into San Pablo Bay. When we visited, the heavy machinery once used to turn sour crude into gas and petrochemicals was surrounded by a superbloom of California poppies and wild mustard. We both remarked on how beautiful it was. A little later, Scott told me that refinery workers tend to die young, and rarely get to take advantage of the retirement packages the union negotiates for them.
This place does not deserve to be burdened with this refinery, I thought. And these people do not deserve to suffer for its closure.
Chaos in the oil sector could actually intensify climate change.
Mother Jones, by Rebecca Leber, April 21, 2020
Getty
As the coronavirus cripples world economies, greenhouse gas emissions are plummeting: This year, they could drop by as much as 5.5 percent—the largest decrease ever recorded. On Monday, the price of oil went negative, meaning storing oil now costs more than the oil itself. Since we’re burning less gas and fuel, air pollution has dropped 30 percent in northeastern cities, and Los Angeles’ notorious smoggy skyline has cleared.
You might be thinking all this is great news for the environment. It’s a nice idea—but the real story is more complicated. “You don’t want companies collapsing like this,” says Andrew Logan, oil and gas director of Ceres, a think tank focused on sustainable investment. “Even the most ardent climate advocate shouldn’t wish for a chaotic transition in this sector. A chaotic transition brings all sort of pain to workers and also the environment.”
It helps to think of COVID-19 as a test run—a very painful one—of what an industry in decline will look like. “We’re seeing, as is case the now, what the cliff looks like if everyone shuts down at the same time,” Logan says.
With a glut of supply, North America producers Exxon, Shell, Devon Energy, and Cenovus Energy have already collectively announced spending cuts this year totaling $50 billion, according to the Wall Street Journal. In North Dakota, Trump donor Harold Hamm’s Continental Resources drilling company has cut output by 30 percent the next two months. In Canada, the famously destructive tar sands are too expensive to mine and refine on oil prices this cheap. Even the Southwest’s Permian Basin, the most productive region for oil and gas in the United States, is expected to see dramatic closures.
Environmentalists are worried about what comes next, because of the many unintended consequences of market chaos. For starters, when gas prices tank, Americans will likely start buying more cars and taking more road trips, driving up demand all over again.
Other environmental problems aren’t quite so obvious. Lorne Stockman, a senior research analyst with the climate advocacy group Oil Change International, worries that the coming bankruptcies this year “are an environmental nightmare in the making,” with “wells left to rot as bankruptcy proceedings are going through.”
As the industry contracts, some drilling operations will simply leave their wells, and many don’t have the funding set aside to take proper precautions to make sure greenhouse gases and other pollutants don’t leak out. Environmental advocates are especially worried about leaks of methane, a particularly potent greenhouse gas.
Abandoned wells are already a big problem. Even in relatively good times, oil and gas wells still dry up. When they do, they might be sold to smaller, sometimes less scrupulous operators to tap what’s left in the well. Then those operators eventually abandon the well or go bankrupt. They can’t afford to clean up the site, which involves plugging the well with cement to avoid leaks into groundwater.
We don’t know for sure how many of these wells exist around the country, though the EPA estimates there are more than 1.5 million of them that have accumulated over a century. Wyoming has had thousands it’s in the process of plugging, and Pennsylvania has 8,000. Taxpayers will eventually pay for both cleanup and environmental damages.
Drilling operations that don’t shutter will have to find ways to cut costs. In boom times, methane is valuable to drillers because it can be captured and reused for fuel. But when oil and natural gas prices have crashed in the past, drillers have sought to get rid of excess methane in the cheapest way possible—by burning it (a process known as “flaring”) or simply letting it leak into the atmosphere (called “venting”). Both processes can contribute to climate change and contaminate surrounding communities. Flaring and venting worry many environmental advocates. The International Energy Agency notes that “low natural gas prices may lead to increases in flaring or venting, and regulatory oversight of oil and gas operations could be scaled back.”
Methane emissions hit a 20-year high last year, according to the National Oceanic and Atmospheric Administration. Although scientists don’t fully understand why, they believe that fracking operations may dramatically underestimate the methane they release. According to the Environmental Defense Fund, operations typically lose 15 times the rate that producers report because of malfunctions and intentional venting. The COVID-19 crisis could lead to more leaks, because companies won’t have any incentive to capture methane to use for fuel.
Amid the turbulence in the oil sector, the Trump administration has continued to roll back environmental regulations, and it has already undone Obama-era rules targeting methane emissions from oil and gas operations.
Nathalie Eddy, a field advocate for the environmental watchdog Earthworks, is worried that environmental contamination will be made worse as the administration weakens rules. “When the market falls like this one of the first things that will go is the limited capacity for inspection,” she says. The EPA, Department of the Interior, and Department of Transportation have already announced they will suspend some routine inspections and monitoring, including pipeline reporting and field inspections, and waive civil penalties if violators say COVID-19 was a factor.
Climate advocates have urged the EPA and Department of the Interior to require companies to monitor methane leaks and set aside money for their cleanup. To help the sector recoup the lost revenue, they propose a job stimulus program aimed at reclaiming these sites for the double-duty benefit of a clean environment and keeping workers employed.
But so far, those pleas are going unanswered. The Trump administration has floated several schemes for helping the oil sector: During the first round of stimulus, congressional Democrats managed to shoot down the oil industry’s bailout request. Now, the administration is considering paying producers to leave crude in the ground until the global glut shrinks. Meanwhile, the major banks want some collateral for the $200 billion they are owed from oil companies: According to Reuters, JPMorgan Chase, Wells Fargo, Bank of America, and Citigroup could even seize the industry’s assets, which could pose an enormous conflict of interest for a financial sector that just months ago was signaling a move away from the oil sector.
So far, it looks like the short-term emissions drop won’t result in any lasting policy improvements, Stockman says. “We have seen the wrong kind of stimulus that isn’t aimed at changing our relationship to fossil fuels.”
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