Another California oil refinery will close next year, raising the possibility of further pressure on gasoline supplies and higher prices for motorists.
Texas-based Valero Energy Corp. stated on April 16 that it had submitted a notice to the California Energy Commission of its intent to idle, restructure, or cease operations at its Benicia Refinery in Northern California by the end of April 2026.
“We understand the impact that this may have on our employees, business partners, and community, and will continue to work with them through this period,” Lane Riggs, chairman and CEO of Valero, said in a statement.
The Bay Area refinery processes about 145,000 barrels per day, accounting for about 9 percent of the state’s crude oil capacity and more than 9 percent of California’s special blend gasoline production, according to the California Energy Commission.
The refinery also produces aviation fuel, which services the San Francisco, Oakland, and Sacramento international airports, and employs 400 skilled and higher-wage workers.
Valero’s California operations include a Wilmington refinery in the Los Angeles area, which provides about 5.25 percent of the state’s fuel. That facility, which is also an asphalt refinery, was not included in the closure notice.
Valero will continue to evaluate alternatives for its remaining operations in California, according to the company.
Oil industry expert Michael Mische, a professor and researcher at the University of Southern California, wrote in a paper provided to The Epoch Times on April 16 that Valero faces low operating margins, increased operating costs, and an increasingly harsh regulatory environment, which all may have factored into its decision to close the plant.
State and Bay Area regulators fined the company $82 million for emissions violations at the Benicia refinery in October 2024.
The pending closure follows an October 2024 decision by Houston-based oil giant Phillips 66 to shutter the company’s two Southern California refining plants in Carson and Wilmington in the fourth quarter of 2025.
Closing the century-old site—which consists of two plants five miles apart, linked by a pipeline—would decrease the state’s refining capacity by about 8 percent.
The Valero and Phillips 66 refineries combined account for nearly one-fifth of the state’s gasoline supply. Their absence could drive up prices at the pump.
Californians are facing a reduction of 21.77 percent in refinery capacity and gasoline production for the 2023 to 2026 period, Mische said in his paper.
Prices are displayed at a gas station in Santa Monica, Calif., on Sept. 13, 2022. Gas prices are expected to increase following refinery closures. Apu Gomes/AFP via Getty Images
“The resulting gap, along with other legislative and regulatory mandates which add cost to a gallon of gasoline, will contribute to higher gasoline prices at the pump for Californians,” Mische said. “California has achieved two objectives. ... It has successfully abdicated its dominion over gasoline supplies and placed its consumers at the mercy of foreign providers.”
The number of refineries in the state will drop to seven with the latest closures from 40 in 1980, while demand has remained steady. According to the California Energy Commission, retail sales of gasoline rose from 11.3 billion gallons in 2020 to 11.7 billion in 2023.
California had the highest average gas price in the nation by about 35 cents per gallon on April 16, according to the American Automobile Association (AAA).
The Phillips 66 plant in Wilmington, Calif., on Nov. 28, 2022. The company plans to shutter the Southern California refinery, which produces about 8 percent of the state's gas supply. Mario Tama/Getty Images
The state average was $4.87 per gallon, while the second-highest was Hawaii with an average price of $4.52.
The national average was $3.17, AAA reported.
California Gov. Gavin Newsom has doubled down on his fight to “take on Big Oil” in the past three years, implementing the nation’s first state regulatory agency to oversee the oil industry.
The new regulations require oil companies to submit detailed reporting about refinery maintenance and closures and comply with the state’s cap on industry profit margins. Oil and gas industry representatives and small business owners have pleaded with the state’s Energy Commission to delay new reporting requirements, saying the rules could raise gas prices.
In August 2024, Newsom also called on state lawmakers to pass new regulations on oil refineries to mandate minimum supply levels to curtail future price spikes. The governor signed the bill on Oct. 14. 2024.
State Attorney General Rob Bonta has also frequently sued oil and gas companies operating in California. The latest lawsuit, filed in 2023 in San Francisco County, alleges that six major oil companies and the American Petroleum Institute engaged in a “decades-long campaign of deception” about their products’ impact on climate and cost the state tens of billions of dollars.
Jill McLaughlin
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Jill McLaughlin is an award-winning journalist covering politics, environment, and statewide issues. She has been a reporter and editor for newspapers in Oregon, Nevada, and New Mexico. Jill was born in Yosemite National Park and enjoys the majestic outdoors, traveling, golfing, and hiking.
