Valero Energy Corporation Sees $325 Million Trading Volume Amid Benicia Refinery Closure Announcement

On April 25, 2025, Valero Energy Corporation (VLO) saw a trading volume of $325 million, marking a 39.83% decrease from the previous day. The stock price of Valero Energy Corporation (VLO) rose by 0.45%.

Valero Energy Corporation (VLO) has announced that it will cease operations at its Benicia oil refinery near San Francisco by next year. The decision is driven by California's challenging regulatory environment and high operating costs. The refinery, which processes 145,000 barrels of oil daily, is a critical component of California's fuel supply chain, providing gasoline to the San Francisco Bay Area and aviation fuel to major airports. Its closure would eliminate 2.92 million gallons of daily gasoline production.

The immediate catalyst for Valero's decision is a $1.1 billion pre-tax impairment charge taken in Q1 2025, reflecting the company's view that its California assets are no longer economically viable. The write-down includes $337 million in expected costs to retire the facilities. Valero cited regulatory overreach, high operating costs, and the state’s aggressive climate policies as key drivers.

California’s environmental policies have created significant challenges for refiners. The 2035 ban on new gasoline-powered vehicles, penalties under Senate Bill X1-2 for exceeding refining margins, and fines for emissions violations have eroded profitability. The state’s fuel standards, which mandate cleaner-burning gasoline, add further costs. These policies, while aligning with California’s climate goals, have pushed refiners to the brink.

The closure of the Benicia refinery alone would result in the loss of 400 jobs, and the broader sector faces further layoffs. The California Energy Commission’s 2023 report warns that California’s refining capacity is already insufficient to meet demand during disruptions, such as storms or pipeline outages. This highlights the difficulty of rapid transitions and the need to maintain existing fossil fuel infrastructure to ensure energy security.

For investors, Valero’s decision raises concerns about the viability of oil majors in states with aggressive climate policies. Valero’s stock has underperformed the S&P 500 by over 20% year-to-date, reflecting market skepticism about its California operations. Meanwhile, investors in utilities or renewable energy firms may see opportunities if the state accelerates its transition to renewables. However, the immediate risk is higher gasoline prices, which could hurt consumer spending and exacerbate inflation.