Valero Energy announced its intention to possibly close the Benicia Refinery, citing high costs and strict environmental regulations in California. The closure could result in significant economic impacts for the city, including job losses and increased gas prices, as the refinery accounts for about 9% of California's gasoline supply. Analysts like Severin Borenstein and Denton Cinquegrana note this might also serve as a negotiating tactic due to increasing local pressure on refinery operations. There are discussions about potential reconfiguration toward renewable fuels if the refinery is not shut down entirely.
"It's quite disturbing that the refinery produces about 9% of the gasoline in California," Borenstein said.
"Certainly, one has to wonder how much this is a negotiating stance because they have recently seen a lot of pressure from the city of Benicia to change their operations," Borenstein said.
"Closing the refinery is one of the options; they could also decide to reconfigure it to make it a facility to make something like renewable diesel or sustainable aviation fuel," Cinquegrana said.
"So yeah, it's gonna be a tight-rope and has the potential to swing prices potentially higher," Cinquegrana said.
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