Exclusive-In rare move, California steps in to find buyer for Valero refinery to avoid closure, sources say
California government officials are currently working to find a buyer for Valero Energy’s Benicia refinery near San Francisco, according to sources familiar with the matter. This effort comes as the company plans to close the facility in April, prompting concerns about fuel supplies and gasoline prices in the state.
The state’s initiative to save the refinery from closure signifies a departure from its previous focus on green initiatives and fossil fuel restrictions. California, home to nearly 28 million drivers who already pay some of the highest gasoline prices in the country, is now prioritizing the preservation of in-state refineries to maintain a stable fuel supply and prevent further price hikes.
The California Energy Commission (CEC) has been actively seeking buyers for the Benicia plant, although the agency has not disclosed specific details about its engagement with potential buyers. Valero, the second-largest U.S. refiner by capacity, has not responded to requests for comments on the matter.
Valero’s decision to cease operations at the Benicia refinery follows a trend in the industry, with Phillips 66 announcing the closure of its Los Angeles-area refinery last year. These closures, along with the conversion of some refineries to produce renewable fuels, are expected to leave California heavily reliant on costly fuel imports, driving prices even higher.
The closure of the Benicia refinery alone could push average gasoline prices in California to as high as $6 to $8 per gallon, according to studies conducted by the University of California Davis and the University of Southern California. To prevent this scenario, the CEC has reached out to potential buyers, including HF Sinclair and European companies with experience in fuel production.
However, industry experts caution that reaching an agreement for the sale of the refinery by the planned closure date in April may be challenging. Refinery sales typically involve a lengthy process of due diligence and negotiation, which could take several months to complete. Despite the aggressive timeline, the state government is determined to find a solution to keep the refinery operational.
California’s climate-first agenda has put the state at odds with energy companies and the federal government, particularly in light of recent conflicts over environmental regulations and fuel supply policies. Governor Gavin Newsom’s administration is exploring new rules to encourage private investment in fuel imports and support struggling refineries in the state.
As the state works towards securing the future of the Benicia refinery, tensions between California’s green agenda and the interests of energy companies continue to shape the landscape of the state’s energy industry. With the clock ticking on the refinery’s closure, California remains committed to finding a buyer to ensure a stable fuel supply for its residents.
