FRESNO COUNTY, Calif. (FOX26) — California’s gasoline supply is set to take a significant hit as Valero announces it will shut down its refinery in Benicia, a move that will eliminate roughly 12% of the state’s current gasoline production capacity.
The closure is raising concerns among lawmakers and energy officials about potential fuel price increases and job losses. California drivers already pay some of the highest gas prices in the nation, according to AAA, and officials warn the impact at the pump may be felt in the coming weeks and months.
About 400 jobs will be lost as a result of the refinery’s closure.
Energy officials say the shutdown reflects a broader shift in California’s energy landscape as the state advances its zero-emission vehicle mandate and works to reduce fossil fuel demand. One energy expert said the decline in refining capacity is tied directly to changing consumption patterns.
“If the demand in California continues to decline, the number of refineries in California will continue to decline,” Siva Gunda, California Energy Commission Vice Chair said. “It’s not about if they are going to close, it’s when.”
State lawmakers, however, argue the transition away from petroleum is not aligning with current energy realities.
Senator David Tangipa warned that the consequences of the Benicia closure may not be immediate but will likely become evident soon — particularly during the high-demand summer months.
“It takes about 12 to 21 days to really start feeling the effects, but you will really feel them when summer hits,” Tangipa said. “Over the last year, we’ve lost about 20% of the refinery capabilities here in the state of California, and there’s a potential chance it’s going to be even worse.”
Governor Gavin Newsom’s office emphasized that refinery closures are not unique to California but are occurring globally as energy markets shift. In a statement, the governor called for two special legislative sessions aimed at ensuring a stable and affordable fuel supply during the state’s transition away from petroleum.
“We have to continue to reduce our demand because that’s the climate agenda of the state,” Newsom said. “The overall climate policy of the state dictates that we move away from fossil demand.”
According to the governor’s office, recent efforts have helped the state avoid the severe gas price spikes seen in 2022 and 2023.
Still, some lawmakers remain skeptical.
Senator Suzette Martinez Valladares is calling for a special legislative session focused specifically on energy policy, arguing that current state policies are restricting supply without sufficiently reducing demand.
“Demand is up and Californians are paying about 50% more at the pump than the national average,” Valladares said. “We produce roughly 20% of the crude oil that we consume, and more than 65% of that comes from foreign sources. We are one more refinery closure, one more pipeline failure, and we’ll be staring at catastrophic instability.”
Valladares warned that gas prices could climb as high as $8 per gallon, disproportionately affecting working-class families.
“This isn’t abstract policy we’re talking about today,” she said. “This is the single mom in Palmdale who drives 60 miles because housing near work is just unaffordable. This is a contractor who cannot pass along the diesel cost without losing the bid. You cannot build a clean energy future on the backs of working families. Not until we stabilize the supply.”
Meanwhile, State Senator Catherine Blakespear introduced Senate Bill 1259, legislation aimed at increasing transparency around refinery closures. The bill would direct the state to develop guidelines for estimating the economic and fuel supply impacts of refinery shutdowns and require refiners to submit detailed reports in advance.
The proposal follows concerns from communities that have experienced sudden refinery closures and the resulting economic and environmental impacts on workers and residents.
As California continues its push toward a zero-emission future, the closure of the Benicia refinery underscores the tension between long-term climate goals and immediate energy and economic concerns — leaving drivers, workers and policymakers bracing for what comes next.