Valero's Benicia Refinery Shuts Down, Causing Gas Price Hike in California
The Valero oil refinery in Benicia, California, has been shut down, leading to a rise in gas prices across the state. Mike Ariza, a former Valero manager and oil and gas expert, confirmed the closure, citing thermal imaging reports indicating the refinery is inactive. Additionally, the Crimson pipeline, which transported crude oil from Southern to Northern California, has also ceased operations.
Ariza emphasized the unprecedented nature of the oil crisis, stating that the situation is dire. Valero Energy Corporation initially planned to close the Benicia Refinery in April 2026, but recent developments suggest an earlier shutdown.
This decision follows Chevron Oil Company's relocation to Houston, Texas, and Phillips 66's plans to close its Los Angeles refinery in October 2025. Oil experts had predicted an earlier closure for Valero, and gas prices have already started to surge.
In April 2025, Valero Energy Corporation announced its intention to shut down the Benicia Refinery by April 2026, citing low operating margins, high operating costs, and a challenging regulatory environment. This included a state-mandated moratorium on internal combustion engine vehicle sales by 2035 and an $85 million fine for emissions violations.
California Governor Gavin Newsom's response was criticized for its tone, as he claimed credit for Valero's responsible planning, including the import of refined products to supply the market. However, Newsom's 'clean energy all-electric future' policy, which includes a ban on internal combustion engine autos, has significantly impacted the oil and gas industry.
The national average gas price is $2.89 per gallon, while California's average is $4.25 and rising. Governor Newsom's energy policies are under scrutiny for potentially causing the largest energy policy collapse in U.S. history, according to a report by California Assemblyman Stan Ellis, USC Professor Michael Mische, and petroleum expert Michael Ariza.
Their report highlights how Newsom's policies are weakening domestic refining capacity and making U.S. military bases in the West vulnerable to foreign adversaries like Russia and China. The conclusion emphasizes the need for federal intervention.
Ariza explained that the early closure of the Benicia Refinery is due to the shutdown of the Phillips 66 refinery in Wilmington, which has reduced crude oil refining capacity by 140,000 barrels per day. Valero's decision to shut down in January, rather than April, is attributed to the state's regulations and fines.
The oil and gas industry in California employs 536,770 people and contributes $338 billion to the state's economy. However, California's reliance on imported oil has increased significantly, with imports accounting for over 70% of the state's oil consumption by 2020.
Assemblyman Ellis, Professor Mische, and Ariza warn that without oil and gas, California's GDP would be severely impacted. The state is facing a potential gas crisis, with gas prices reaching $8.43 per gallon as refineries close, which could have significant political implications.
