Communicator

Valero Benicia Refinery @Valero

April 16, 2025 | Valero Energy Corp.

Valero Energy has announced it will shutter its Benicia refinery near San Francisco by the end of April 2026, marking another major reduction in California’s refining capacity. The company formally notified the California Energy Commission of its intent to idle, restructure, or cease operations at the 145,000-barrel-per-day facility, which accounts for nearly 9% of the state’s gasoline production. Valero is also weighing strategic alternatives for its remaining California operations, including its Wilmington refinery near Los Angeles, as part of a broader review of its business in the state

This decision comes as California’s regulatory environment for refiners becomes increasingly stringent. Recent state legislation has imposed new mandates, including requirements for refineries to maintain minimum gasoline inventories and develop contingency plans to prevent price spikes. These rules, combined with California’s aggressive emissions targets and unique fuel standards-such as the exclusive requirement for California Reformulated Blendstocks for Oxygenate Blending (CARBOB)-have raised compliance costs and operational complexity for in-state refineries

The Benicia closure follows a similar move by Phillips 66, which plans to shut its Wilmington refinery by the end of 2025. Together, these closures will eliminate almost 300,000 barrels per day of refining capacity, raising concerns about fuel supply stability and the potential for even higher gasoline prices in a state where drivers already pay some of the highest prices in the country

California’s policies aim to reduce gasoline consumption and transition to cleaner energy, but the rapid pace of regulatory change has contributed to a wave of refinery exits and conversions to renewable fuels.

Valero has recorded a combined pre-tax impairment charge of $1.1 billion for its Benicia and Wilmington refineries, reflecting the financial impact of these strategic shifts. The company also faces significant asset retirement obligations as it prepares for the Benicia shutdown

Industry analysts warn that the loss of refining capacity could make California more reliant on imported fuels, further exposing the market to price volatility and supply disruptions.

As California continues to pursue its ambitious climate goals, the state’s refining landscape is undergoing a profound transformation, with traditional operators reassessing their future amid intensifying regulatory and market pressures.

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