Valero will close its Benicia Refinery, adding to the oil industry exodus from California and pushing gas prices even higher.
Valero Energy Corporation has announced it will idle or close its Benicia Refinery in California, just the latest in the exodus of fossil fuel companies from the state. [emphasis, links added]
Six months ago, Phillips 66 announced the closure of its Los Angeles-area refinery by the end of this year – it’s since bumped the date up to October — and a few months before that, Chevron announced it would be moving its headquarters from San Ramon, California, to Houston.
After the two refineries close, it’s not clear exactly where California will find more gasoline and other finished petroleum products, such as jet fuel, to satisfy demand.
All the options at the state’s disposal are expensive.
Residents of the Golden State already pay the highest gasoline prices in the nation, and the state’s lawmakers show no sign of reversing course on their anti-fossil fuel agenda, driving away the state’s petroleum industry.
Warnings ignored
Over the past several years, Democratic Gov. Gavin Newsom signed into law several rules unwelcoming to the state’s oil and gas industry, on the belief that such companies are bad actors.
Last October, he proposed a law that would require petroleum refiners in the state to maintain a minimum fuel reserve to prevent shortages that cause gasoline price spikes.
In an announcement on the proposal, Newsom blamed oil companies for high gasoline prices and promised further regulation of the industry would solve the problem for residents.
Arizona Gov. Katie Hobbs, a fellow Democrat, and Nevada Gov. Joe Lombardo, a Republican, whose states border California, sent a joint letter to Newsom urging him not to sign the refinery regulations into law, arguing it would lead to gasoline price spikes and shortages.
Their warnings, along with those from many other critics, were ignored. Two days after Newsom signed the law, Phillips 66 announced it was shutting down its Los Angeles refinery.
Michael Mische, a University of Southern California professor and management consultant, told Just the News that the Valero closure, expected to happen in April of 2026, is no surprise considering the regulatory environment in which petroleum companies must work.
The loss will reduce California’s refining capacity by 22%.
“It’s a fifth of the capacity you’re taking out of circulation,” Mische said. “Demand is not going to come down, so there’ll be a significant gap between supply of gasoline versus demand.”
The state consumes about 33 million gallons of gasoline per day, Mische said, and almost all of it is produced by in-state refineries.
In 2035, California’s electric vehicle mandate will kick in, banning the sale of all gas-powered cars in the state. And Mische suspects that other refineries will soon join the exodus.
“This is all legislative,” he said. “These refiners have no incentive to stay in the state. They have no incentive to invest.”
Chevron has two refineries operating in California, which combined account for nearly 40% of the state’s refining capacity. However, Mische said only about 3% of Chevron’s sales are generated in California.
“There’s no real compelling reason for them to stay past 2030. And personally, I think they’re next,” he said.
Mike Vomund, Chevron’s vice president of fuels, told KCRA 3 last week that the state’s policies over the last 20 years have made it difficult for the oil industry to operate.
He wouldn’t speculate on what might happen down the road, but he said that the state’s lawmakers are making it “uninvestable.”
Read rest at Just The News
We give you energy news and help invest in energy projects too, click here to learn more
