Valero to Close Benicia Refinery in 2026; Wilmington's Future Uncertain
Valero Energy announced April 24, 2025 that it would cease operations at its 170,000-barrel-per-day Benicia refinery by the end of April 2026. Valero had earlier announced its intention to “idle, restructure, or cease operations” at the San Francisco Bay Area refinery by the end of April 2026. The company has also indicated that it could close its 135,000-barrel-per-day Wilmington refinery in Los Angeles.
The developments come amid concerns about California's high gasoline prices and declining fuel supplies and refining capacity. California gasoline prices are among the highest in the country.
Valero stated that it evaluated both the Benicia and Wilmington refineries for impairment and “concluded that the carrying values of these assets were not recoverable.” The company recorded a $1.1 billion pre-tax impairment charge related to operations at these refineries for the quarter ended March 31, 2025.
The Benicia plant has a capacity of 145,000 barrels of oil a day, according to the California Energy Commission (CEC), putting it at around 9% of the state’s refining capacity. The refinery produces California Reformulated Gasoline Blendstock for Oxygenate Blending (CARBOB) and Conventional Blendstock for Oxygenate Blending (CBOB) gasolines, CARB diesel, diesel, jet fuel and asphalt. The Wilmington plant has a capacity of 85,000 barrels of oil a day, putting it at 5.24% of the state’s refining capacity. The refinery produces CARBOB gasoline, diesel, CARB diesel, jet fuel, and asphalt. It accounts for approximately 15% of the asphalt supply in Southern California.
Increasing Policy Uncertainty
Valero cited the uncertainties that remain with respect to current or contemplated legal, political or regulatory developments that are adverse to or restrict refining and marketing operations…” These risks also include proposals to “impose taxes or penalties on profits, windfalls, or margins above a certain level…”
Valero CEO Lane Riggs said on an earnings call that California has “been pursuing policies to move away from fossil fuels for the past 20 years, and the consequence of that is the regulatory and enforcement environment is the most stringent and difficult of anywhere else in North America.” Riggs noted that maintenance costs for the Benicia refinery are higher than those for the Wilmington refinery.
Valero CEO Lane Riggs cited California’s regulatory environment as contributing to the decision to close the facility. Riggs said on an earnings call that California has “been pursuing policies to move away from fossil fuels for the past 20 years, and the consequence of that is the regulatory and enforcement environment is the most stringent and difficult of anywhere else in North America.” Riggs noted that maintenance costs for the Benicia refinery are higher than those for the Wilmington refinery.
Valero’s decision comes shortly after Phillips 66 closed its Wilmington Refinery, also known as its Los Angeles Refinery, in the fourth quarter of 2025. Phillips 66 cited the “uncertainty of the long-term sustainability of the refinery and market dynamics” in its decision.
Republican politicians have blamed the shutdowns and loss of refinery capacity on the state’s energy policies. In October 2024, Governor Gavin Newsom signed into law AB-1, which will require oil refineries to maintain minimum inventories of refined fuels, feedstocks, and blending components and to have resupply plans to cover production loss during maintenance. The bill was introduced after Newsom called for a special session of the legislature in response to rising gasoline prices.
In an April 21, 2025 letter to CEC Vice Chair Siva Gunda, Newsom directed the CEC to work with refiners to ensure reliable fuel supplies, according to Market Watch. He directed the CEC to “redouble the state's efforts to work closely with refiners on short- and long-term planning, including through high-level, immediate engagement, to help ensure that Californians continue to have access to a safe, affordable and reliable supply of transportation fuels, and that refiners continue to see the value in serving the California market, even as demand for fossil fuels continues its gradual decline over the coming decades.”