Category Archives: Just transition

Dirk Fulton: A Great Day for Benicia, Part Two

VALERO FIRE: A CALL TO ACTION FOR PERMANENT CLOSURE OF THE REFINERY

By Dirk Fulton, May 8, 2025
[and appearing in the Benicia Herald on May 11, 2025]

Dirk Fulton, Benicia

Last Monday’s Valero Refinery fire and shelter-in-place order provided Benicia residents-including Robert Semple Elementary School students and teachers- with a real time reminder that the refinery should be shut down for good while the opportunity exists.

The fire allowed us to visualize the risks we face. Beyond this, there are known risks we cannot visualize: For at least 16 years, the Valero refinery secretly polluted us with cancer-causing toxins such as benzene, toluene, and xylene—all known to cause cancer, reproductive harm and other negative health effects. After discovery, the Bay Area Air Quality Management District (BAAQMD) imposed a record-setting $82 million dollar fine against the refinery. The settlement highlighted Benicia as an “air dump” for the State of California, further tarnishing the city’s image.

The fire and secret toxic emissions are stark reminders that it would be a grievous mistake to replace Valero with another operator. When Shell Oil Martinez recently ceased operations, the refinery was taken over by another company. Since then, shelter-in-place orders have become a regular occurrence. We can avoid such a result by pursuing a modern vision for Benicia without a refinery. By doing so, we can enjoy toxic-free air, nurture healthy children and realize higher home values as the “refinery town” stigma is eliminated.

We cannot surrender to published scare tactics that closure will cause a “financial doomsday”. This is wrong. We are no longer a small 1960s town of 5,000 dependent on the Benicia Arsenal for jobs, nor are we Vallejo of the 1990s dependent on the Mare Island Naval Shipyard for economic survival. The present Benicia economy is diversified and does not rely solely on a single military installation or oil company for its prosperity. We are a commuter-oriented residential community where our 13,100 working residents commute from Benicia or work from home. Less than one percent (1%) of our city’s residents work at the refinery and fewer than 100 of Valero workers live in town. Accordingly, the predicted job loss following closure, although unfortunate, is not material to our local economy.

Proponents of the refinery, including some city officials, falsely state that the city will immediately lose $12 million in revenue if the refinery closes. This is wrong. Taxes and fees do NOT immediately vanish when a business closes, or a home becomes vacant. Real properties maintain inherent value. Valero’s property taxes should largely stay the same, as its 900 acres, infrastructure and improvements continue to hold value. Additionally, Valero has already benefited from significant Prop. 8 property tax reductions after extensive litigation with the County Assessor.  Further, any projected property tax loss should be offset by higher property taxes as post-closure, higher value homes turn over and new homes are built.

Additionally, without a refinery, there are many revenue streams available to Benicia:

    1. New Development Fees. On the 900-acre refinery site, new housing construction along the East 2d Street corridor and clean energy projects sited in the refinery footprint will result in millions of dollars in new development fees.
    2. Water Revenue. Valero pays the city a nominal rate of $2 million for 50% of the city’s total water supply compared to the almost $7 million that residents pay for the remaining 50% of our water supply. Accordingly, this newly available water resource once treated has a multimillion-dollar value when offered on the free market to other municipalities.
    3. UTT. The Utility User Tax (UUT) generates ongoing revenue. Since 1989, Benicia residents have paid UUT at a rate of 4%. Valero has never paid its fair share of UTT as its predecessor Exxon sued the city to receive a special rate of approximately 1%. Valero remains under a reduced rate UUT agreement negotiated in 2018. Upon closure, the refiner should be forced to buy-out of its 2018 agreement or pay fees to rectify its 35 years of underpayment, which could result in millions of dollars to the city.
    4. Increased Sales & TOT (Hotel) Taxes. Following refinery closure, Benicia will be more attractive to tourists, thereby increasing visits and business at shops, restaurants and hotels allowing the city to capture increased sales and TOT (hotel) tax.
    5. Port Tax. Port tax is a potential source of revenue for port communities. The Port of Benicia handles approximately 260,000 imported vehicles annually accounting for about 20% of California’s seaborne vehicle imports. A $50 port use fee imposed on each vehicle entering the port could raise $13,000,000.00 annually for the city. Such fee could be passed on to consumers as an inclusion in the “vehicle prep” fees common on all new car invoices.
    6. BAAQMD Funds. The BAAQMD’s Settlement Agreement with Valero provides $56 million to the city as pollution mitigation fees. The funds may be viewed as a safety net to bolster the city during the transition away from the refinery. The funds can be used to support various city projects, including refinery closure costs, oversight of environmental cleanup, assistance to schools, development of parks and open space, and the like.

In sum, to ensure clean air, healthy kids, and safe homes with rapidly appreciating values, we should heed the call to action presented by the Valero fire, envision a new modern-era Benicia without a refinery and resist scare tactics that promote its continued operation. As set forth above, the city can financially endure the transition in a just way.

Change admittedly can be challenging for all of us: I do miss Mabels, the art glass studios, Tia Theresa, the Brewery and Sam’s Harbor restaurant, but I will not miss refinery fires, secret toxic air emissions or shelter-in-place orders.

Dirk Fulton, Lifelong Benicia resident
Former Solano County Planning Commissioner, Benicia Vice-
…..Mayor, City Councilman & School Board President
Visit: www.Greatdayforbenicia.com


Read Dirk Fulton’s series, A Great Day for Benicia


KQED’s extensive recent coverage of Valero’s Benicia refinery

Benicia’s Industrial Safety Ordinance April 1; Valero announces impending closure April 16;  Huge refinery fire on May 5

Valero Benicia 2023-09-21, Martin do Nascimento/KQED

Valero Refinery Fire in Benicia Is Under Control After Warnings to Stay Indoors
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)

Potential Valero Refinery Closure Leaves Benicia, State Officials Scrambling for Alternatives
The potential closure of the massive Benicia oil refinery by next April would have a major impact on the city’s economy and the state’s oil supply. (Including comments of Benicia Mayor Steve Young and Benicia attorney-activist Terry Mollica.) 

‘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 Moves Toward Tougher Oversight of Valero Refinery
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.)

See also on KQED:

Our hearts go out to Valero employees…

How they found out about the closure

By Benicia Independent, April 27, 2025

The stacks from the Valero Benicia Refinery are seen as a pedestrian walks in a nearby neighborhood, in Benicia, Calif. (Capitol Public Radio) | Rich Pedroncelli / AP Photo

Almost everyone in Benicia has a friend, neighbor or a loved one who works at the Valero Refinery.

For the most part, Valero workers are regular folks, people with jobs of all kinds, people whose jobs have felt secure, now suddenly undercut. Our friends and neighbors have stories to tell about the closure. There are some who were planning to retire with extended benefits soon. Others who won’t have that option. Many are wondering where they will land after the refinery closes.

A friend of mine talked to a neighbor who is a good friend and a longtime refinery employee. He said they were notified by email the morning the news came out, Wednesday, April 16th, but he didn’t check his email, and was shocked to find out in a morning meeting at the start of his shift.

At the morning meeting, they were told the pending changes had a number of causes:

    • stricter state of California regulations
    • reduction in profits due to pending tariffs on oil from Canada that they use for refining
    • the barrel price of their refined product has fallen, which affects profitability
    • and the overall reduction of potential profits due to the increasing trend of fuel efficient and electric car sales.

…all signs of the times.

He wondered about the possibility of Valero restructuring, but doubted it was possible. Anyway, that wasn’t discussed at their meeting.

He said Valero almost had a buyer, but the buyer backed out because of what was seen as a lack of profitability – the same factors causing Valero to decide to close the operation.

He said that recent changes in Valero leadership felt like a signal that something big was about to happen. And speaking of signals – he’s heard that a Valero boss bought a hybrid car. But he’s worked at the refinery for more than two decades, and so this announcement came as a big surprise.

Although he will survive with a generous retirement package, he’s really concerned about younger workers. No one he knows was given any “heads up” about this decision. It came down like a thunder bolt on Wednesday, April 16th, the same day that the public learned about it.

Our hearts go out to the workers. One can hope that Valero and the City of Benicia will cooperate in planning a “just transition” – with care and compassion for employees and a deep stewardship for the land in Benicia’s Industrial Park.


MORE ABOUT VALERO CLOSURE… (here on the BenIndy)

KQED: Benicia’s Valero Refinery may NOT close – “Hail Mary” possible?

Potential Valero Refinery Closure Leaves Benicia, State Officials Scrambling for Alternatives

KQED News,  By Matthew Green, April 26, 2025

The Valero refinery in Benicia on Sept. 21, 2023. The potential closure of the massive Benicia oil refinery by next April would have a huge impact on both the city’s economy and the state’s oil supply. (Martin do Nascimento/KQED)

A week after Valero announced plans to “idle, restructure or cease” operations at its massive Benicia oil refinery by next April, company executives said that while the plant’s closure was more than likely, it was not yet a foregone conclusion.

In an earnings call Thursday, Valero executives left open the possibility of a Hail Mary, saying they had plans to meet with state and local officials to discuss potential options.

“I do think there’s a genuine interest in California to avoid the closure,” Richard Walsh, Valero’s executive vice president, said during the call. But he quickly added, “Our current intent right now is to close the refinery.”

A week after Valero announced plans to “idle, restructure or cease” operations at its massive Benicia oil refinery by next April, company executives said that while the plant’s closure was more than likely, it was not yet a foregone conclusion.

In an earnings call Thursday, Valero executives left open the possibility of a Hail Mary, saying they had plans to meet with state and local officials to discuss potential options.

“I do think there’s a genuine interest in California to avoid the closure,” Richard Walsh, Valero’s executive vice president, said during the call. But he quickly added, “Our current intent right now is to close the refinery.”

Valero CEO Lane Riggs cited California’s tough “regulatory and enforcement environment” as the main driver behind the company’s intent to cease operations at the sprawling North Bay facility. The sixth-largest refinery in the state, it currently produces up to 145,000 barrels of crude oil a day, accounting for about 9% of the state’s production.

“California has been pursuing policies to move away from fossil fuels for really the past 20 years,” Riggs said, calling the state’s regulations “the most stringent and difficult of anywhere else in North America.”

Benicia Mayor Steve Young doesn’t disagree with the assessment, but said he wishes the company had provided more lead time.

“We need to get moving on this quickly because 12 months is not a long time given the severity of the economic impact,” said Young, noting that nearly 20% of Benicia’s $60 million budget comes from the refinery. “I think that’s part of my frustration, is how little time we have to try to plan for some kind of an alternative.”

Shutting down the facility, he added, would also be a major blow to the hundreds of residents who work there, not to mention the scores of restaurants, hotels and other businesses that provide services to those workers in this city of some 27,000 residents.

The Valero refinery is also the exclusive supplier of jet fuel to nearby Travis Air Force Base, which it delivers through 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 and it’s potentially a national security issue.”

Valero dropped its bombshell April 16 announcement roughly six months after regional and state air regulators fined the company a record $82 million for secretly exceeding toxic emissions standards for at least 15 years. And last month, city leaders voted unanimously to impose moderate new safety regulations on the facility.

Map showing location of Valero's Benicia refinery
Map by Matthew Green/KQED

“I suspect that compared to other refinery operators, they’re a pretty good business operator. But they’ve also had a pretty bad track record on public safety,” said Terry Mollica, who leads a group of residents that pushed for the city’s new safety rules to increase oversight of the refinery.

But Mollica said that he doesn’t think anybody in his group is particularly excited about the possibility of the facility closing altogether.

“There would be long-term and short-term impacts on the community,” he said. “People would lose their jobs. None of us want to see that happen particularly.”

Valero has owned and operated the Benicia refinery since 2000. The refinery was originally built in 1968 for Humble Oil, later called Exxon, and began operations the following year.

Its possible closure comes amid a growing exodus of traditional oil refiners in California. 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, in this week’s earnings call, hinted that they may also soon consider “strategic alternatives” for the company’s only other California refinery, located near Los Angeles, which accounts for more than 5% of the state’s crude oil supply.

“California is phasing out its gasoline consumption and refiners see that coming,” said Severin Borenstein, a UC Berkeley energy economist. “We should be seriously concerned about how all that gasoline supply is going to get replaced.”

California has dramatically reduced its reliance on fossil fuels in recent decades, but most residents still drive gas-powered cars and will continue to do so for years to come, Borenstein said, even though the state already has some of the highest gas prices in the nation.

Gov. Gavin Newsom underscored that sense of urgency this week in a letter (PDF) to California Energy Commission Vice Chair Siva Gunda. He urged the commission to “redouble” its efforts to ensure refiners “continue to see the value in serving the California market, even as demand for fossil fuels continues its gradual decline over the coming decades.”

“I am directing you … to reinforce the State’s openness to a collaborative relationship and our firm belief that Californians can be protected from price spikes and refiners can profitably operate in California — a market where demand for gasoline will still exist for years to come,” Newsom wrote.

A customer prepares to pump gas into his truck at a Valero gas station on July 22, 2013 in Mill Valley. (Justin Sullivan/Getty Images)

Almost immediately after Valero’s announcement, Newsom was lambasted by state Assembly Republicans, who said the potential closure was among the growing number of “real-world consequences” of [his] war on California energy producers that was “becoming clearer by the day.”

In his letter, Newsom defended two different laws he signed in the last two years that give the state more oversight of the oil industry and regulate backup supply when refineries go offline in order to prevent market irregularities. He also asked state energy and environmental officials to produce a report by July 1 on “any changes in the State’s approach that are needed to ensure adequate supply during this transition.”

“The California Energy Commission continues to be committed to working with stakeholders to explore options to ensure an affordable, reliable, and safe transportation fuel supply,” Sandy Louey, a spokesperson for the commission, said in an email in response to Newsom’s letter.

Young, whose city has long felt the health impacts of the refinery’s toxic releases, said he understands the motivation behind California’s ambitious regulations.

“I think certainly [California’s] done them for lots of good environmental reasons, and that obviously climate change is a real thing and burning fossil fuels is a direct contributor to it,” he said. “Did they go too far? I don’t want to say that. But it certainly has created an environment where oil companies feel that either they’ve been unfairly targeted or they are just seeing this as perhaps a way to negotiate some rollbacks of some of those things.”

Young acknowledged that the refinery’s closure would yield some “net benefit” to the health and safety of his community.

“And so from an environmental point of view, sure, it’s certainly possible to look at it as a silver lining,” he said. “But overall, given how quick this is unfolding, I’m certainly not celebrating it by any means.”