Ericka Cruz Guevarra [00:01:24] Before we get into the latest news here, remind folks about the Valero refinery in Benicia. Where is it exactly and what goes on there?
Julie Small [00:01:36] Well, it’s right on the Carquinez Strait in Benicia.Built in 1968 for Humble Oil, which later became Exxon, and it was sold to Valero in 2000. I got to tour the facility about 10 years ago, and it’s like a town within a town. They even have their own fire brigade, made up of refinery operators who, like during an incident, will respond. They refine crude oil into gasoline, and they refine a lot of it, about 145,000 barrels per day. They also employ 400 workers and lots of contractors, people who come in to help with specific operations like ironworks, steam fitters, boil makers, painters. Suffice it to say, it’s a major employer in the San Francisco Bay Area.
Ericka Cruz Guevarra [00:02:34] And what can you tell us about Valero, the company which bought this refinery, as you said, in 2000? What do we know about them?
Julie Small [00:02:43] Well, they are the second largest U.S. Refiner in the United States. They have headquarters in Texas, but they have refineries all over the country. They also operate a second refinery in Southern California. It’s the Wilmington refinery, and it produces a little less than the one up here.
Ericka Cruz Guevarra [00:03:03] And I imagine plays a big role in the city of Benicia, which is a pretty small city. I mean, what role does Valero as a company play in the City?
Julie Small [00:03:18] It’s the major economic engine of the city of Benicia. They pay taxes that make up about 10 to 12% of the City budget. It’s also a big client for a lot of local businesses that supply services, goods, or labor, and, you know, restaurants in the area. They donate to nonprofits, and they lend financial support for Benicia’s school district. So they’re very, very deeply involved in the community in all those good ways and some not so great ways.
Ericka Cruz Guevarra [00:03:48] How would you describe the relationship between Valero and the city of Benicia, especially over the last couple of years?
Julie Small [00:03:56] Well, it’s complicated. It’s interesting how people are very quick to praise the company, but also quick to criticize the company and the refinery specifically and the operations there. Air regulators just last year fined the company a record $82 million for exceeding toxic emissions standards, not for an hour or a day, but for over a decade. And that has really blown the trust. For a lot of people. They are even those people in Benicia who were always supportive of the refinery.
Ericka Cruz Guevarra [00:04:36] Yeah, sort of this love-hate relationship that I feel like you kind of see in refinery towns all over the Bay Area that rely on the jobs, but that also bear the brunt of the environmental impact.
Julie Small [00:04:49] That’s right. There was one woman who spoke at a city council meeting and she said, yeah, it’s great that Valero is helping the school district, but what good does it do if all of our kids have asthma? And asthma has been a big issue in Benicia. And according to state health data from 2020, nearly 15% of the people in the county of Solano, which includes Benicia, have asthma, which is about 70% higher than the statewide average.
Ericka Cruz Guevarra [00:05:22] Okay Julie, so I mean we’re talking because Valero actually made a really surprising announcement last week. What did the company announce?
Julie Small [00:05:33] That the company is going to idle, restructure, or cease operations at its Benicia refinery by the end of April, 2026. And in a press release, the CEO and president of Valero said that they understand the impact that it may have on employees, business partners, and the community as a whole, and they’ll continue to work with them through this period.
Ericka Cruz Guevarra [00:06:00] Okay, “idle, restructure, or cease operations, those are three very different things. And it sounds like no clear decision has necessarily been made quite yet, but it sounds something is going to change.
Julie Small [00:06:20] They could pause their operations and wait to see if the Trump administration takes action against some of our environmental standards, or they could try to sell the facility. Something’s gotta give, either California is gonna make life easier for refineries or deal with the sudden loss of them.
Ericka Cruz Guevarra [00:06:38] I mean, has Valero said anything about why they are doing this, either in the announcement or in interviews with the media?
Julie Small [00:06:47] Valero didn’t say this in their press release, but Valero has been signaling that they’re pretty unhappy with California as an environment to do business. As everybody knows, California is committed to reducing our use of fossil fuels and we are passing laws and creating a climate where we’re moving towards that goal and refineries don’t like it. That got particularly worse in the last year because California regulators accused Valero of price gouging. There were some words exchanged with the California Energy Commission that basically said, we’re not price gouging. Your gas in California is more expensive because of all the regulations you’ve put on it. And there have been some other laws passed very recently that really get into the nitty gritty of how the, you know, the refinery operates. They described it as a hostile environment that California has created towards refineries.
Severin Borenstein [00:07:57] It is a harbinger of the larger issues that California faces.
Julie Small [00:08:02] I talked with Severin Borenstein, he’s with the Haas School of Business at UC Berkeley and an economics and energy expert.
Severin Borenstein [00:08:11] California is phasing out its gasoline consumption and refiner see that coming.
Julie Small [00:08:17] In California, you have the market for that fuel, for what you’re refining, the very product you’re making is actually shrinking, you know, and the idea is that we will not be reliant on that fuel anymore in the future.
Severin Borenstein [00:08:30] This refinery in Benicia has had a lot of production problems and emissions problems that make it look like they’re going to have to make some significant investments in order to maintain production and still obey environmental rules. So I think they looked at that and said, is it worth making that investment?
Julie Small [00:08:58] I mean, you’re seeing this, like we saw it, Phillips 66 decided to close their refinery in Southern California. That’s gonna close at the end of this year. They said, poor profits, we’re not making profits.
Ericka Cruz Guevarra [00:09:16] Coming up, how locals are reacting to Valero’s announcement. Stay with us.
Ericka Cruz Guevarra [00:09:29] Whatever happens, it sounds like, is going to have a big impact, especially on the city of Benicia. What have you heard locally from people in the city? I mean, was this a big surprise?
Julie Small [00:09:41] Yeah, it was. I think they felt like they were still in dialogue with Valero about how to make things better, how to work better together, and they wake up to this news. And for them, it’s like the nuclear option they were most afraid of.
Kari Birdseye [00:09:56] Well, we woke up to a big surprise this morning. It is some shocking news.
Julie Small [00:10:03] I talked to city council member, Kari Birdseye. She is one of the people who was really pushed for increased oversight and accountability at Valero. And she called it shocking.
Kari Birdseye [00:10:14] First of all, my thoughts go to our local workers and other small businesses that will be impacted by this news.
Julie Small [00:10:26] I think the big concern in Benicia is how do you replace an economic powerhouse like a refinery? I mean, and Birdseye talked about possibilities of like getting involved in some offshore wind projects, ship building, but it’s really clear they don’t have a plan in place. They’re not ready for this to happen so quickly.
Kari Birdseye [00:10:46] We will be resilient and we will figure out, you know, who we want to bring to our town and you know make sure that whoever comes to town isn’t going to increase our asthma rates.
Ericka Cruz Guevarra [00:11:00] I feel like she really kind of captures this tension of this just transition in California away from oil refineries, but also the reality, which is that a lot of people rely on these refinerys for work. I mean, what have you heard from workers? There’s a lot people who could possibly lose their job if Valero ceases operation in Benicia.
Julie Small [00:11:24] That’s right, 400 employees at the refinery itself and then hundreds of union contract workers who cycle through the refineries every year, different times of the year.
Danny Bernardini [00:11:35] You’re hopeful, but you’re also realistic that it’s California.
Julie Small [00:11:39] Danny Bernardini with the Napa-Solano Building and Construction Trade Council. He wasn’t surprised. He says anyone who’s been paying attention knows that the future of refining in California is dim. He’d just been talking to Valero about renewing contracts for his members. He was excited and then he wakes up to the news that there may be no contracts.
Danny Bernardini [00:12:00] We have state and local governments that are not fond of refinery those people drive cars and they have reliance on oil but they also you know there’s a lot of laws and ordinances that have a path that make it hard to do business and so this is the other side of that coin.
Ericka Cruz Guevarra [00:12:26] Well, Julie, this announcement last week was a pretty big shock, it sounds like, but April 2026, that’s still a year away from now, so I guess what happens in between now and then?
Julie Small [00:12:40] Well, you know, local officials, you know, are saying they’re going to be looking for new industry partners and trying to develop a plan. They expect they’ll be losing $8 million a year if Valero closes. They’re going turn to the state to ask for help. They’re gonna ask other cities that were refinery towns how they’ve made the transition.
Gavin Newsom [00:13:04] Just briefly on that, respecting the importance of that question.
Julie Small [00:13:08] Gavin Newsom, our governor, was asked about the closure. You know, I guess he was contacted the night before the news came out and the morning after. And he made a comment and he said, you know, we’re all hands on deck dealing with this and we’re gonna make sure that this doesn’t disrupt the markets and, you know doesn’t hurt anything and we are on it.
Gavin Newsom [00:13:28] Beginning last night, we had all hands and we’re in the process of addressing any anxiety that may be created or any market disruption that may be created by that announcement.
Julie Small [00:13:39] The other thing that could happen is that the Trump administration could roll back some of the environmental regulations and standards that California has fought so hard to get. And if that happens, that might change the equation for Valero, at least in the short
Ericka Cruz Guevarra [00:14:04] Julie, we’ve talked on this show about the various refineries around the Bay Area in cities like Benicia and Richmond and Martinez and Rodeo. And I know each one of these cities is very different, but do you think this story tells us anything about the future of oil refinerys here in the Bay area?
