Valero: Firm in plans to shut Benicia refinery in 2026

Valero: Firm in plans to shut Benicia refinery in 2026

Benicia, California, is facing a significant challenge as Valero Refining Company-California plans to idle and cease operations at its Benicia refinery by April 2026. The refinery, which has been a critical part of the city's economy and fuel supply, is under threat due to various factors, including environmental concerns and the state's push for green initiatives.

The Benicia City Manager, Mario Giuliani, has emphasized the urgency of the situation, stating that "time is of the essence" [1]. The city has been working diligently to find solutions, but the potential loss of the refinery could lead to a $10 million budget deficit [1]. Giuliani has partnered with Tyler Munis to evaluate the situation, and the city is preparing for a significant financial shift.

The California Energy Commission, which has been tasked with penalizing oil companies for excess profits, has not yet imposed any penalties. Instead, Vice Chair Siva Gunda has recommended pausing the effort to focus on other policies to lower prices and maintain a steady oil supply [1]. This shift in strategy reflects the state's growing concerns over fuel supplies and high gasoline prices.

The Benicia refinery, with a throughput capacity of 170,000 barrels per day, is a significant contributor to California's crude oil capacity. Valero Energy Corporation, through its subsidiaries, owns and operates the refinery, which was originally built for Humble Oil and later owned by Exxon [1]. The refinery's closure could leave California in a crisis, as it would lose a significant portion of its fuel supply [1].

The state is actively seeking a buyer for the refinery to avoid its closure. The California Energy Commission has been engaging with market players to explore pathways for the continued operation of in-state refineries [2]. The rare move by the state to broker the sale of privately-owned infrastructure reflects its growing concerns over protecting fuel supplies and keeping a lid on prices.

The potential closure of the Benicia refinery comes amidst a broader trend of refineries converting to produce renewable fuels or shutting down due to market dynamics. This shift could leave California even more dependent on expensive fuel imports, further driving up gasoline prices.

The Benicia City Council has also taken steps to protect its residents from potential fires, explosions, and toxic emissions connected to the refinery. The city passed a safety ordinance in April to address these concerns [1].

In conclusion, the potential closure of the Benicia refinery presents a significant challenge for California. The state is taking unprecedented steps to find a buyer and keep the refinery operational, reflecting its growing concerns over fuel supplies and high gasoline prices. The situation underscores the complex interplay between environmental policies, economic concerns, and the need for reliable fuel supplies.

References:
[1] https://www.siliconvalley.com/2025/07/24/benicia-still-working-diligently-to-save-refinery/
[2] https://www.reuters.com/sustainability/climate-energy/rare-move-california-steps-find-buyer-valero-refinery-avoid-closure-sources-say-2025-07-23/