Valero Energy made a surprise announcement, suggesting it may close its Benicia Refinery a year from now – hey could also decide to reconfigure it to make it a facility to make something like renewable diesel or SAF
BENICIA, Calif. (KGO) — Oil giant Valero Energy made a surprise announcement Wednesday, suggesting it may close its Benicia Refinery a year from now.
Problems at the facility have caused toxic chemical releases and a record air quality fine.
Its closure would mean Benicia would lose millions of dollars a year and hundreds of jobs.
It could also mean the price you pay for gas may rise dramatically.
Valero has submitted notice to the California Energy Commission of its current intent to “idle, restructure, or cease refining operations” at the Benicia Refinery, drawing strong reactions across the state. UC Berkeley’s Severin Borenstein is an expert in this field and has testified in front of lawmakers on refinery matters.
Borenstein said,
It’s quite disturbing that the refinery produces about 9% of the gasoline in California,
According to a statement from the company, the refinery is seeking closure because of the high costs and strict environmental regulations in California.
Borenstein said,
Certainly, one has to wonder how much this is a negotiating stance because they have recently seen a lot of pressure from the city of Benicia to change their operations,
Denton Cinquegrana, the chief oil analyst at Oil Price Information Service, gave his perspective on the future of the refinery.
He said,
Closing the refinery is one of the options; they could also decide to reconfigure it to make it a facility to make something like renewable diesel or sustainable aviation fuel,
The real question here is if this refinery closes, will California gas prices rise?
Cinquegrana said,
So yeah, it’s gonna be a tight-rope and has the potential to swing prices potentially higher,
Borenstein and Cinquegrana both point to the closure of the Phillips 66 Refinery in Southern California. They say that with another possible closure, the state must plan to import more gas to keep prices from rising too drastically.
Borenstein said,
We just need to do it in a way that’s not going to disrupt the supply-demand balance,
“If we lose too many refineries too quickly, we’re going to end up with a shortage, but we could very well see a 25 to 30 cent increase as a possibility.”
Cinquegrana said,
The refinery is not scheduled to close for another year, so a lot can change in another year,
There is a hope that the state and company work together on the matter, so drivers aren’t impacted too much at the pump come next year.
Valery released this statement from Chairman, CEO and President Lane Riggs:
Valero Energy Corporation announced today that its subsidiary, Valero Refining Company-California, has submitted notice to the California Energy Commission of its current intent to idle, restructure, or cease refining operations at Valero’s Benicia Refinery by the end of April 2026.
Valero continues to evaluate strategic alternatives for its remaining operations in California,
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.
“In connection with the evaluation of strategic alternatives for Valero’s operations in California, a combined pre-tax impairment charge of $1.1 billion was recorded for the Benicia and Wilmington refineries, and is expected to be treated as a special item and excluded from first quarter 2025 adjusted earnings. Also included in this amount is the recognition of expected asset retirement obligations of $337 million as of March 31, 2025.”
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Valero Energy made a surprise announcement, suggesting it may close its Benicia Refinery a year from now – hey could also decide to reconfigure it to make it a facility to make something like renewable diesel or SAF, source
