California’s already sky-high gas prices are expected to surge after Valero abruptly shuttered its Benicia refinery amid a spiraling “oil crisis,” a new report claims.
The Benicia refinery began shutting down on Saturday, four months earlier than planned, a former Valero manager told the California Globe Tuesday.
The closure will cause the state’s already sky-high gas prices to soar, a new report said.
Thermal imaging showed the facility went cold as the Crimson Pipeline – which transports crude oil from Southern to Northern California – was also taken offline.
“We are in an unprecedented oil crisis,” oil expert Mike Ariza told the publication.
Valero Energy Corp. announced its plans last spring to pull the plug on its 145,000-barrel-per-day refinery by April, a move that is expected to send fuel prices skyrocketing and hobble the state’s refining capacity.
Valero Energy Corp. announced its plans last spring to pull the plug on its 145,000-barrel-per-day refinery. Bloomberg via Getty Images
Californians already pay the second-highest gas price in the nation behind only Hawaii. In January, the average price was $4.23 per gallon, according to the American Automobile Association.
Operations costs are 26 ro 37% higher than the national average. Carlin Stiehl for California Post
Refineries are fleeing the Golden State as regulations drive operating costs 26 to 37% higher than the national average. Chevron moved its operations from the Bay Area to Texas, while Phillips 66 powered down its 140,000-barrel-per-day Los Angeles refinery in October.
Ariza warned that as refineries go dark, more Californians will also skip town, noting that the oil and gas industry supports 536,770 jobs and pumps $338 billion into the state’s economy, the outlet reported.
He said Valero’s accelerated shutdown comes after the company scrapped its crude oil contracts back in October.
“Now, Valero is not even seeking to try and sell the refinery,” Ariza told the outlet in December.
“Even after the state tried to convince Valero to remain open, they elected to shut down. And instead of shutting down in April, they shutdown in January. All due to the state’s egregious regulations and unprecedented unjustified fines.”
The sudden closure comes as the state Assembly handily passed a controversial “road charge” bill that would launch a study on a new tax last week despite pushback from critics suspicious of another pinch on their wallets.
The Democrat-backed proposed mileage tax would replace the gas tax with a per-mile fee, potentially costing California drivers an extra $228 to $1,026 a year. The charge could run two to nine cents per mile, based on an average of 11,400 miles driven annually.
The legislation — dubbed Assembly Bill 1421 — does not impose the tax but will fund research on rates and collection methods by the California Transportation Commission and state Transportation Agency.
The proposed tax comes as California faces a nearly $3 billion budget deficit, with lawmakers seeking to recoup lost revenue as more drivers switch to electric and hybrid vehicles.