Valero's Benicia Refinery Shuts Down, Causing Gas Price Hikes in California
The Valero oil refinery in Benicia, California, has been shut down, leading to a potential oil crisis. Mike Ariza, a former Valero manager and oil and gas expert, confirmed the closure on January 31st, citing thermal imaging reports indicating a cold refinery. The Crimson pipeline, which transported crude oil from Southern to Northern California, is also down.
Ariza warns, "We are facing an unprecedented oil crisis."
Valero Energy Corporation announced in April 2025 that it would shut down the Benicia Refinery in April 2026. This decision came after Chevron Oil Company relocated to Houston, Texas, and Phillips 66 began shutting down its Los Angeles refinery in October 2025. Oil experts predicted an earlier shutdown, and gas prices were already rising.
In April 2025, Valero Energy Corporation notified the California Energy Commission of its plans to "idle, restructure, or cease refining operations at Valero’s Benicia Refinery by the end of April 2026." This decision was influenced by low operating margins, increased operating costs, and a harsh regulatory environment, including a state-mandated moratorium on internal combustion engine vehicle sales by 2035. Valero incurred a $1.1 billion write-off charge related to asset impairments.
California Governor Gavin Newsom issued a statement, but it was criticized for its tone and content. Newsom's "clean energy all-electric future" policies, which include a ban on internal combustion engine autos, have been accused of harming the oil and gas industry. The national average gas price is $2.89, while California's average is $4.25 and climbing.
A report by California Assemblyman Stan Ellis, USC Professor Michael Mische, and petroleum expert Michael Ariza warns that California's gas crisis threatens U.S. military force readiness on the West Coast. Governor Newsom's energy policies are sabotaging domestic refining capacity, leaving U.S. military bases vulnerable to foreign adversaries.
Ariza explains that the Phillips 66 refinery shutdown in October 2025 accelerated Valero's closure date from April 2026 to January 2026. Valero is not seeking to sell the refinery and has shut down due to state regulations and fines.
The oil and gas industry in California provides 536,770 jobs and a $338 billion economic contribution. However, California imports over 65% of its crude oil, and the state's energy policies are causing a ripple effect, impacting neighboring states like Nevada, which relies heavily on California for gas.
The report highlights the importance of oil and gas for California's GDP, with 92% of the state's GDP dependent on these resources. Without oil and gas, California's economy would face significant challenges. As refineries close, gas prices are expected to rise, potentially reaching $8.43 per gallon, according to Professor Mische's warning.
