[Comment from BenIndy editor: We previously issued a call for Benicians to attend an August 20 hearing before a Joint California Assembly Committee in Sacramento to consider the legislation known as the “Petroleum Market Stabilization” bill. Several Benicia residents attended, including Dirk Fulton, who offers the following reflections. – RS]
The legislature is clearly following the recommendations of the California Energy Commission (CEC) at Gov. Newsom’s request. CEC Vice-Chair Gunda made a lengthy presentation and answered followup questions from legislators. Late in the hearing, an Assemblyman from Los Angeles asked if the State was considering “taking over” the refinery. Gunda responded saying that Valero is in private talks with the CEC and all options are being explored to keep Valero open. One option could of course include a joint venture structure between Valero & the State. Oil companies do this all the time.
This alternative would be a horrible result for Benicia from both a regulatory and refinery closure standpoint.
Another Assemblyman commented that if exports of California refined product to Nevada and Arizona were reduced, there would be a 10% surplus in capacity of refined product thereby eliminating the prospect of any California gas shortages following a Valero closure. There was also discussion of increasing imports which is doable, and subsidizing further EV usage thereby reducing demand for gasoline, which would allow Valero to close without causing gasoline prices to spike.
Importantly, a longtime energy consultant to Citizens for a Better Environment and now a consultant to the CEC released a study yesterday morning demonstrating that as the PBF Martinez refinery returns to production (closed since the February fire), its production will offset any loss of production from a Valero closure.
A lobbyist from the Western States Petroleum Association (WSPA) was allowed to present for twenty minutes and respond to questions for another twenty. He stated that he meets regularly with the CEC to advocate for Valero remaining open. He seemed to have strong influence over the CEC and legislators including Benicia’s representative Lori Wilson.
Mayor Young’s 10 minutes of testimony did not help us regarding getting Valero closed. He basically wants the refinery to remain open for at least five more years-which basically means forever. He did NOT address our high cancer or asthma rates or address ongoing health risks to residents.
My takeaways:
Refining capacity is manageable. It can be maintained at acceptable limits following a Valero closure so gas prices don’t spike.
A State/Valero venture would be horrible for Benicia as increased regulation would be difficult and the refinery likely would never close. This seems to be a WSPA idea and comes from the Donald Trump playbook , e.g., what Trump has our federal government doing with Intel – a joint-venture-like concept where USA is contributing capital to sustain Intel Corp and receiving equity and profits in return.
Our best strategy to discourage the State and Valero going forward and to discourage any potential buyer is the local Polluters Pay Excise tax ballot measure. A $1 per barrel tax would substantially diminish refinery profit thereby operating as a disincentive. The Richmond example shows it works. Mayor Young told me in a hallway conversation that he supports the idea, and has received advice from City Attorney Ben Stock this week that it is legal.
We need a local citizens committee to be formed to lobby for this proposal.
Dirk Fulton, Lifelong Resident & former Solano County Planning Commissioner, Vice Mayor, City Councilman & School Board President
For More Information visit: www.greatdayforbenicia.com
AS THE CITY & STATE WORK TO KEEP VALERO OPEN, A LOCAL REFINERY “POLLUTERS PAY” EXCISE TAX IS REQUIRED TO PROTECT US
By Dirk Fulton, August 17, 2025
URGENT: STATE ACTION & LEGISLATIVE HEARING THIS WEDNESDAY, AUGUST 20
We know Governor Newsom, the California Energy Commission (CEC) and the legislature are seeking to keep the Valero Benicia refinery open. Our city leaders have been complicit with the State in this effort. In fact, the CEC is acting as a broker to find a replacement operator and the Governor is sponsoring legislation to cut refinery regulations as an enticement to attract a successor.
A hearing is set for 1:30 PM this Wednesday (8/20) before a Joint State Assembly Committee in Sacramento to consider the legislation, known as the ‘Petroleum Market Stabilization” bill. Benicia residents are encouraged to attend the hearing and express their opposition. A sign-up form is here. Further info and talking points will be provided once you’ve signed up. And please reach out to action@sunflower-alliance.org if you can give a ride on Wednesday or want to join some others on the train.
OUR HIGH CANCER RATES REQUIRE CITY ACTION
Benicia residents Dr. Richard Fleming and columnist Steve Golub have separately published articles documenting that Benicia’s rates of cancer are much higher than Solano County and the State of California. The rates are astonishing:
Our breast cancer rate is 94% higher than the California rate.
Our prostate cancer rate is 70% higher than the State’s.
Our rate of lung cancer is 44% higher than the State rate.
Valero’s emissions routinely exceed Air Board limits and over a 16-year period ending last November, the emissions exceeded Air Board limits by 360%, often constituting 2.7 metric tons of hazardous pollution daily. Extensive medical studies have found a well-documented connection between residents living in refinery communities and higher cancer rates.
A “POLLUTERS PAY” EXCISE TAX CAN BE USED TO PROTECT US
Unless citizens’ efforts in opposition to the Governor’s bill are successful on Wednesday, it appears likely that the State will cause the Valero refinery to remain open indefinitely, perhaps through a new operator.
The Benicia City Council, accordingly, should immediately take action to place a refinery $1-per-barrel excise tax (“Polluters Pay Tax”) on the ballot. Only a simple majority vote is needed for passage. The tax would apply to all feedstock refined at Valero’s two refineries, including product refined elsewhere and placed in storage tanks at the refinery, and would generate $50-$70 million per year for a 50-year period. The tax proceeds can support pollution-fighting services like real-time extensive air monitoring, air filters for schools, advanced health and safety monitoring for neighborhoods, and environmental oversight and cleanup. Importantly, the tax can be crafted as an excise tax—targeted specifically at local refining, not a broad manufacturing or consumer tax.
In mid-2024, the Richmond City Council unanimously approved placing a refinery excise tax ballot measure on the ballot targeted at the Chevron refinery. Chevron opposed the proposal which led to a settlement on June 18,2024 as follows: Chevron agreed to pay the city of Richmond $550 million structured as $50 million annually the first five years, and $60 million for the next five years in exchange for the city removing the tax proposal from the ballot.
Our Benicia City Council has a duty to protect us from refinery pollution and should move forward expeditiously to place a similar $1-per-barrel excise tax on the ballot. Should the City Council once again fail to act, residents can circulate Initiative petitions, gather signatures and cause the tax to be placed on the ballot in June 2026. Hopefully, our city leaders will do the right thing and the Initiative process will not be necessary.
Dirk Fulton, Lifelong Resident & former Solano County Planning Commissioner, Vice Mayor, City Councilman & School Board President
For More Information visit: www.greatdayforbenicia.com
Guy Mazorati interview with Severin Borenstein and Alex Nieves
A view of oil-well in action during sunset at Elk Hills Oil Field as gas prices on the rise in California, United States on April 14, 2024. (Tayfun Coskun/Anadolu via Getty Images)
California has long gone head-to-head with big oil, leading many of the efforts to curb climate damage caused at the hands of the fossil fuel industry – including spearheading lawsuits against oil companies and pushing fracking bans. But faced with the closure of two state refineries, and rising gas prices, Governor Gavin Newsom has made some major concessions on oil to not only keep the refineries open, but to draft a bill for more drilling in Kern county. We’ll talk about California’s changing relationship with the oil industry, the state’s efforts to phase out fossil fuels, and what’s going to happen to gas prices in the meantime.
Guests:
Severin Borenstein, faculty director, The Energy Institute at UC Berkeley’s Haas School of Business; member, Board of Governors of the California Independent System Operator
Alex Nieves, California transportation reporter, POLITICO
Tim Grayson, California State Senator for District 9 [in a later broadcast]
This partial transcript was computer-generated. While our team has reviewed it, there may be errors.
Guy Marzorati: This is Forum. I’m Guy Marzorati, in for Alexis Madrigal.
During Gavin Newsom’s time as governor of California, he’s had one constant foe — one year-in, year-out rival with whom he seems to relish every single fight — California’s oil and gas industry. But that all might be changing, as oil refineries announce closure plans in Los Angeles and here in Benicia, making California’s complex energy transition even more complicated for the governor and fellow Democrats in the state Capitol.
That’s what we’re going to be talking about this hour with Alex Nieves, California transportation reporter at Politico. Good morning, Alex.
Alex Nieves: Good morning. Thanks for having me.
Guy Marzorati: Great to have you with us. And Severin Borenstein, director of the Energy Institute at UC Berkeley’s Haas School of Business. Good morning, Severin.
Severin Borenstein: Good morning.
Guy Marzorati: Thanks so much for joining us. And later, we’ll talk with Tim Grayson, California state senator representing parts of Contra Costa County, including the refinery community in Martinez.
Alex, I want to start with you. We’ve seen Newsom go to the mat against the oil and gas industry for years. What’s going on now?
Alex Nieves: Yeah. As you mentioned, over the last four years, Governor Newsom has really gone much further than his predecessor, Jerry Brown — who focused on getting folks to transition to EVs and cleaner technologies but didn’t really target the supply side of the equation.
Governor Newsom, on the other hand, has made some strong efforts to target industry priorities. I think of the ban on fracking as one example. We’ve also seen, in a couple of special sessions, lawmakers pass legislation around a price cap and maintaining minimum storage at refineries to prevent shortages when refineries go offline.
Those are all things refiners say will backfire and cause refineries to close, leave the state, or change their business strategies. Those are threats we’ve seen for years, and they haven’t always materialized.
But there’s a big change this time around.
Phillips 66 last October announced it would be closing its facility in Wilmington in the Los Angeles area. Valero announced the pending closure of its Benicia facility in April — and that’s caused a real threat of a decline in refining capacity.
Whenever you lose capacity, you constrain supply. That means an increase in prices — and no lawmaker wants to be in power when gas prices go up.
So recently, we’ve seen the governor change course. The California Energy Commission has issued a slate of recommendations aimed at keeping these refineries open, and Newsom’s office is floating a draft bill that would do a number of things — most notably, streamline permitting for oil-rich Kern County.
Guy Marzorati: Do you have the sense that Newsom was caught off guard by the refinery closure announcements?
Alex Nieves: I do — maybe less so for Wilmington, which is one of the older facilities in the state and had signs this could happen. But Benicia is a facility that I’ve heard from sources wasn’t really on the table for immediate closure.
You could see it in the state’s messaging after the Wilmington closure was announced. Ty Milder, the governor’s oil czar, kind of pushed it aside and said the state could survive — it wasn’t an immediate concern.
Immediately after the Benicia refinery announcement, I think the state went into panic mode.
Guy Marzorati: And how much of this is about the result of last year’s election too? Because we saw Democrats come back to Sacramento this January with, like, a vow renewal on the cost of living — it was going to be a top priority. How do you see that playing into this conversation?
Alex Nieves: Yeah, and it’s not just in California. Nationally, we’re seeing the Democratic Party on a course correction — a focus on cost of living and affordability.
Notably, at the beginning of this session, Assembly Speaker Robert Rivas announced that anything that doesn’t fall within this affordability frame is something the state shouldn’t consider. And I, as a climate reporter, took that to include climate action.
Take a step back a couple of years — the governor and Attorney General Rob Bonta were spearheading a lawsuit to hold companies liable for climate-change-related damages. And as recently as last October, we were writing stories about how the oil industry’s influence was waning in the state.
That’s completely changed. And I do think it’s because Democrats are looking toward 2026 and trying not to seem tone-deaf. Every gubernatorial candidate we’ve seen so far has committed to keeping refineries open.
So yes — I think it’s a reflection that the Democratic Party feels like they may have missed where voters were in November.
Guy Marzorati: Severin Borenstein, do you see this as a major policy pivot by the Newsom administration?
Severin Borenstein: Oh yeah. It’s definitely a pivot.
The direction over the last few years has been to go after the refineries as a major source of high gasoline prices. And that was never really accurate.
If you look at how much money refineries are making — separate that from the profits made downstream in distribution, marketing, and retailing — the big differential, what I call the “mystery gasoline surcharge,” this extra amount Californians pay beyond the higher taxes and fees, is not at the refineries.
If you look at the spot price — the wholesale price of gasoline in California — it’s really not out of line with the rest of the country once you account for the cost of making our cleaner-burning gasoline.
We do have a real gasoline price problem, beyond the higher taxes and environmental fees, and that’s happening downstream.
So I think it’s unfortunate that a lot of people in Sacramento were saying the problem is these refineries are making too much money. The closure of these refineries now suggests that was clearly wrong — that, in fact, they don’t think they can make enough money.
Both of the refineries that are closing faced real environmental costs. They likely did the calculation: is it worth making the huge capital investments necessary to stay in business? Are we going to make enough money over the long run to pay for that?
All of this is happening in the context of California’s major push to reduce gasoline consumption — which has finally started to take hold.
The increase in EVs and higher-mileage hybrid vehicles has been reducing California’s gasoline demand. And as it drops, these refineries are rethinking whether it makes sense to invest.
Benicia was a particular point of pressure because they were under penalties for recent pollution emissions. They were also facing increased scrutiny, and the city was forming a new committee to oversee the refinery and enforce environmental restrictions.
Guy Marzorati: Right. There was local pressure as well. But Newsom has said, look, refineries across the globe are struggling. Is that true?
Severin Borenstein: Yeah. I think a lot of refineries, particularly the older ones, are not making a lot of money.
Going back to the 1970s, refining was not considered a great business. The big, vertically integrated companies made money extracting oil — they sort of broke even or worse on the refining side.
That changed in the ’90s when demand for gasoline took off, and for a while, refineries were making good money — even the less efficient ones.
But as demand has plateaued — and in California, started to decline — they haven’t been able to keep up those profits. So now we’re seeing pressure on them and some decisions to close.
And that’s going to happen. If California reduces gasoline consumption, these refineries will start to close. We need to plan for that — manage the closures, ensure a smooth supply of gasoline, even as we gradually lose refineries.
Guy Marzorati: Yeah. Alex, what are you hearing in the legislature about that planning? Are those plans being made? How is this transition unfolding?
Alex Nieves: We’ve heard the discussion for years, but I think what this episode has shown is that the state just hasn’t put in the time and effort to develop a fully fleshed-out transition plan.
The governor framed his pivot not as a departure from the state’s climate policies but as a recalibration — a slowdown so we can actually put plans in place.
How do you protect workers — including unions that largely support Democrats — as you close these facilities? How do you help a city like Benicia, built around this industry, or a place like Richmond with the Chevron refinery, avoid collapse if a refinery picks up and leaves?
I’ve heard ideas floated — maybe requiring a four-year instead of one-year warning for closures, or requiring some relationship between refiners and the state to create a worker transition plan. But those are things we just haven’t seen yet.
In the immediate term, the state seems to be aiming for policies that keep supply up — increase in-state crude, increase imports. But the actual planning behind a transition? I think that’s the next step — and we’re still quite a ways from a solidified plan.
Guy Marzorati: Yeah. And we’ve got about thirty seconds before the break — but it’s also, you know, Newsom is still trying to hold this mantle of climate leadership, right? He’s still battling with the federal administration while all this is happening in California.
Alex Nieves: Yeah, absolutely. We’ve seen the state file dozens of lawsuits — many of them in the climate, energy, and environmental space.
I think it’s fair to say that California is still a leader in some ways on the federal landscape. But I know that within the state, environmental groups are quite livid. They really see this as a departure from the past.
Guy Marzorati: Yeah. That’s Alex Nieves, California transportation reporter at Politico.
We’re talking about whether California is reconsidering its stance on oil production as two refineries are slated to close. And we want to hear from you.
What would you like to see as these refineries make plans for their future?
Do gas prices affect how you think about the state’s oil production?
Give us a call at 866-733-6786. Or get in touch with us on social @kqedforum or by email: forum@kqed.org.
Three months after Valero Refining Company-California submitted notice to the California Energy Commission of its intent to idle and cease operations in April of 2026, Benicia leaders are still searching for solutions.
However, Benicia City Manager Mario Giuliani said “time is of the essence” as some deadlines are fast approaching this month in an attempt to keep the refinery in Benicia.
“The city has been working diligently to find solutions to this depth of a loss,” Giuliani said on Wednesday. “We have multiple task forces talking. We’re trying to prepare for the huge revenue loss to the city, but overall still communicating and forming action plans.”
Giuliani said Benicia has partnered with Tyler Munis to process and evaluate the situation.
“The city is preparing to have a significant and seismic shift with losses,” Giuliani said. “There is a potential of a $10 million loss on a $16 million budget.”
A drone view of the Valero Benicia Refinery in Benicia, Calif., on Thursday, May 1, 2025. The refinery is scheduled to close by April 2026 (Jane Tyska/Bay Area News Group)
In 2023 Gavin Newsom signed a law giving the California Energy Commission the authority to penalize oil companies for excess profits, declaring the state had “finally beat big oil.” More than two years later, the commission hasn’t imposed a single penalty or determined what counts as an excessive profit.
However, just two years later, the California Energy Commission Vice Chair, Siva Gunda, said that the state should pause the effort in favor of pursuing other policies to lower prices and maintain a steady oil supply.
“Together, we will evolve California’s strategy to successfully phase out petroleum-based fuels by 2045 while protecting communities, workers, and consumers, and foster market conditions that support the industry’s ability to operate safely, reliably, and successfully to meet demand through the transition,” Gunda wrote in a 24-page letter to Newsom in late June.
Gunda’s recommended pause of the penalty would have to be agreed upon by the full commission. Newsom has pitched the penalty as a way to rein in profits by oil companies, but critics said it would only raise prices.
Meanwhile California government officials are trying to find a buyer for the refinery. Giuliani said that losing the refinery would put California in “a crisis for 2026.”
“California will not have a significant fuel supply to meet demand,” Giuliani told the Times-Herald on Wednesday. “All the other refineries are planning to leave as well, so we that doesn’t help. There is a declining demand for fossil fuel, but still enough of a demand that we need it.”
Valero Energy Corporation has owned and operated the Benicia Refinery since 2000. The refinery was originally built for Humble Oil, later called Exxon. Construction of the facility began in 1968 and was completed in 1969.
Valero Energy Corporation, through its subsidiaries (collectively, Valero), is a multinational manufacturer and marketer of petroleum-based and low-carbon liquid transportation fuels and petrochemical products, and sells its products primarily in the United States, Canada, the United Kingdom, Ireland and Latin America.
Valero owns 15 petroleum refineries located in the U.S., Canada and the U.K. with a combined throughput capacity of approximately 3.2 million barrels per day.
Valero Headquarters in San Antonio, Texas, and has more than 9,900 employees, with approximately 400 at the Benicia venue. That refinery has a throughput capacity of 170,000 barrels per day, according to the company. According to a list from the California Energy Commission, Benicia has 8.94 percent of the state’s crude oil capacity.
In connection with the evaluation of strategic alternatives for Valero’s operations in California, a combined pre-tax impairment charge of $1.1 billion was recorded for the Benicia and Wilmington refineries, and is expected to be treated as a special item and excluded from first quarter 2025 adjusted earnings. Also included in this amount is the recognition of expected asset retirement obligations of $337 million as of March 31.
Despite the grim news, Giuliani wanted to remind the public that Benicia has a history of coming through in adversity.
“We lost the Benicia Arsenal and Benicia Barracks in the mid 1960’s, but we came back with an industrial park on that land,” Giuliani said. “But we also need to face reality as we will be facing a period of austerity and we need to proceed with action and find new growth for our city.
“This is now a state issue and the state does not want to see this happen,” the city manager continued. “Conversations are continuing and there is certainly a chance that Valero stays, but time is of the essence. There is no deadline, but we’re talking about an amount of days were key points need to take place.”
Giuliani said that Benicia is at a crossroads.
“We’re tackling and fighting a war on two fronts,” the city manager said. “We’re fighting problems of the past while also fighting this problem with the refinery that instead of fighting ten years down the road, we are fighting now.”
The city of Benicia was given a shelter-in-place alert and areas south of the Valero Refinery were evacuated after a power outage caused a flare up sending plumes of black smoke across Interstate 680. – Chris Riley — Times-Herald
While Valero is a big part of Benicia business, is it not without its critics — particularly after the refinery became the site of a series of air pollution incidents. This includes a hydrogen vent at the refinery that had been leaking 2.7 tons of toxics into the air for 15 years.
That discovery resulted in an historic $84 million fine imposed by the Bay Area Air Quality Management District (an oversight agency) in 2024.
Critics also point to inspectors reporting that Valero management had known about the leaks for years, but failed to report them or take steps to mitigate the leak. The fine reportedly was the largest penalty ever assessed by the district.
Valero was one of four other refineries that in 2023 didn’t meet requirements as defined by BAAQMD and Rule 12-15. That rule — passed in 2016 — requires refineries to monitor and report fugitive gasses from their operating equipment, such as valves, compressors, and storage tanks. These emissions impact the health of the surrounding communities — the toxic gases released include noxious chemicals like the cancer-causing benzene.
The Benicia City Council on April 2 voted 5-0 on a safety ordinance that aims to help protect Benicians against potential fires, explosions and toxic emissions connected to the Valero Refinery and other facilities causing health concerns in the city. Before the vote, Benicia was previously the only Bay Area refinery town to not yet have an Industrial Safety Ordinance.
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