Valero Plans to Close Northern California Oil Refinery
The closure would leave the state’s gas-guzzling motorists with seven refineries, which could lead to higher gasoline prices, an industry expert says.
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 Corporation said 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.
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.
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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 (USC), wrote in a paper provided to The Epoch Times on Wednesday that Valero faces low operating margins, increased operating costs, and an increasingly harsh regulatory environment as reasons for the plant closure.
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 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 a gallon, while the second highest was Hawaii with an average price of $4.52.
The national average was $3.17, AAA reported.
Gov. Gavin Newsom has doubled down on his fight to “take on Big Oil” in the past three years, implementing the nation’s first regulatory agency to oversee the oil industry.
