California officials are stepping into the fray to urgently find a buyer for Valero’s Benicia refinery before its scheduled closure in April 2026, a rare move that underscores the state’s growing anxiety over fuel security and price volatility. According to Reuters, in an exclusive report on Wednesday, the state has opened talks with potential buyers, including HF Sinclair and at least one unnamed European energy firm, to take over the Bay Area facility and preserve in-state refining capacity.
The 149,000 barrels-per-day refinery is one of just 10 still operating in California. Its shutdown, combined with the planned 2026 closure of Valero’s Wilmington facility in Los Angeles County, could reduce the state’s gasoline and diesel production by nearly 17%.
In a position of desperation, the California Energy Commission is leading the effort to broker a deal, with support from the governor’s office. The move is an attempt to avoid severe market disruptions and cushion consumers from steep price spikes.
The stakes are particularly high. State modeling suggests that removing Benicia from the refining system could push pump prices toward $8 per gallon, particularly during summer demand peaks. Analysts warn that the closures could also reduce fuel inventories and strain supply chains across the western U.S.
As KQED reported earlier this month, Benicia city officials were blindsided by Valero’s June 28 announcement. Local leaders fear the loss of one of their top employers and taxpayers, Benicia receives roughly 40% of its general fund from refinery-linked revenues.
“It was a complete surprise,” said Vice Mayor Terry Scott, noting the lack of prior consultation from Valero.
The refinery employs about 500 workers and supplies fuel to major Bay Area terminals. If no buyer is found, dismantling could begin as early as 2027.
While California has long pushed for an energy transition, state officials are now grappling with the near-term consequences of rapid fossil fuel phase-outs that risks destabilizing energy infrastructure.
By Charles Kennedy for Oilprice.com
