Governor Newsom Criticizes Valero Amid California Refinery Exit

California Governor Gavin Newsom has sharply criticized Valero Energy Corporation following the company’s announcement that it will scale back operations at its Benicia refinery, citing regulatory and economic pressures as key factors in the decision. Valero disclosed a $1.1 billion impairment charge on its California assets, reflecting the costs and challenges of complying with the state’s strict environmental regulations, and signaled plans to idle, restructure, or potentially close the refinery by April 2026.

The Benicia facility, which processes roughly 145,000 barrels of crude oil per day, has been a critical part of California’s fuel supply chain. Valero explained that meeting the state’s stringent emissions targets and operational compliance requirements had made long-term operations increasingly difficult, contributing to the financial write-down. While the announcement raised concerns about potential fuel shortages and rising prices, company officials emphasized that they were taking steps to manage the transition responsibly.

Governor Newsom responded by highlighting the need to balance California’s ambitious climate agenda with the practical realities of maintaining reliable energy infrastructure. While he has championed aggressive environmental policies aimed at reducing carbon emissions and transitioning to cleaner energy, he stressed the importance of protecting consumers and ensuring the state’s energy supply remains stable. In recent legislative sessions, Newsom backed measures requiring refiners to maintain minimum fuel inventories and plan for maintenance outages to prevent shortages, signaling a proactive approach to addressing potential disruptions.

Critics of Valero’s move warned that a reduction in California’s refining capacity could increase reliance on out-of-state or imported fuels, potentially driving up gas prices and straining the state’s so-called “energy island” status, which limits pipeline connectivity and makes the region more vulnerable to supply shocks. Analysts have noted that closures like Valero’s could have significant ripple effects on both local economies and consumers, particularly during periods of high demand.

The Newsom administration has indicated it will work closely with industry stakeholders to mitigate the impact on workers and communities affected by refinery changes. Programs for workforce retraining, economic incentives, and other support measures are being considered to help ease the transition for employees and families.

Valero’s decision reflects a broader tension in California between environmental leadership and economic competitiveness. The state’s regulatory framework, while praised for advancing climate goals, has also been criticized for making it difficult for certain industries to remain financially viable. Governor Newsom emphasized that the state remains committed to upholding environmental standards while also exploring strategies to maintain energy reliability and protect consumers.

As the Benicia refinery approaches its planned operational changes, the administration, lawmakers, and industry leaders continue to assess solutions that balance environmental commitments, economic realities, and energy security, illustrating the complex challenges of transitioning to a cleaner energy future without compromising the stability of California’s fuel supply.