By next year, California may have one less refinery to produce gasoline and other fuels to motorists across the state.
Valero, one of the country’s major transportation fuels producers, notified the California Energy Commission on Wednesday morning that the company intends to “idle, restructure, or cease refining operations” at Valero’s refinery in Benicia by the end of April 2026.
Valero officials did not give a specific reason why it might cease operations. The San Antonio-based company’s CEO Lane Riggs said in a news release, “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.”
The Benicia refinery in Northern California is the sixth largest among the industry’s fleet in the Golden State, refining 145,000 barrels per day and ing for almost 9% of California’s crude oil capacity.
Just a few months ago, Phillips 66 said it will shut down its refinery in the Los Angeles area by the end of 2025. Similar to the Valero Benicia refinery, the twin Phillips 66 facilities in Carson and Wilmington for almost 9% of the state’s capacity, according to the California Energy Commission.
The Valero announcement comes as tensions have risen between the petroleum industry and Gov. Gavin Newsom, particularly after gasoline prices spiked to more than $6 a gallon across California in late summer and early fall of 2022 and 2023.
Newsom accused oil companies and refiners in the state of “lying and gouging Californians to line their own pockets” and at his urging, the state Legislature ed Senate Bill X1-2 that included provisions creating the Division of Petroleum Market Oversight to monitor California’s oil and gasoline companies.
The legislation gave the California Energy Commission authority to penalize oil companies if they exceed a “maximum gross refining margin.” The specifics of what will trigger the penalty — the first of its kind in the U.S. — and when it will be enforced are still being worked out.
Oil companies and refiners in the state deny manipulating gas prices.
An executive from Chevron last year blamed supply shortages and high prices on “20 years of bad policy” decisions by California policymakers that “have made made the state ‘uninvestable’ by reducing refiners’ incentive to invest the annual capital needed to maintain the fuel production capacity needed.”
In August 2024, Chevron announced plans to move its corporate headquarters from San Ramon to Houston.
If Valero decides to shut down its refinery in Benicia, Patrick De Haan, head of petroleum analysis at GasBuddy, said it would result in “more volatility, more price shocks, likely higher prices” at the pump and the state being even more reliant on foreign sources of oil.
In 2024, 63.5% of oil supply to California refineries came from foreign sources, according to the energy commission.
There are 13 refineries in California, but five of them are very small. Eight major refineries for about 96% of crude oil capacity in the state — and that figure includes the Valero refinery in Benicia and the Phillips 66 twin facilities in Carson and Wilmington.
“I think the state is going to have to cut regulations and come up with something that’s a little bit better in of business climate for existing refiners or they’re going to risk additional refineries shutting down in the years ahead,” De Haan said.
Newsom’s office directed comments about the Valero announcement to the energy commission.
In an email, commission Vice Chair Siva Gunda said Valero’s advance notice “helps the state to continue to closely monitor the evolving conditions in the fuel supply market and proactively plan and take steps to the transition in the state’s fuel supply.”
Gunda added the commission “is committed to its efforts to collaborate with the industry and stakeholders so that the state continues to have a safe, reliable and affordable supply while transitioning away from fossil fuels.”
In September 2020, Newsom issued an executive order that 100% of in-state sales of new enger cars and trucks will be zero-emission by 2035, citing the need to reduce air pollution from internal combustion engines and further California’s clean energy efforts.
After Valero made its announcement, Republicans in Sacramento fired verbal shots at Newsom and statehouse Democrats, with Senate Minority Leader Brian Jones, R-Santee, accusing them of “attacking the very energy suppliers we rely on, despite the consequences we’re already seeing: lost jobs, higher costs for businesses and rising prices on everyday goods.”
Gas prices have long been a source of irritation for California drivers.
The average price for a gallon of regular in the Golden State stood at $4.886 on Wednesday, the highest of any state. The national average, according to AAA, was $3.169.
