Valero Energy announced that it will continue importing gasoline into Northern California after its Benicia refinery ceases operations in April 2026. The 170,000‑barrel‑per‑day facility will shut down, but the company’s import plan will keep the West Coast market supplied while it reallocates capital toward higher‑return Gulf Coast assets.
The decision follows Valero’s broader strategy to optimize its portfolio amid regulatory and enforcement pressures in California. CEO Lane Riggs said the company “understands the impact on employees and partners” and that the move is part of a portfolio‑optimization plan that focuses on assets with lower operating costs and higher margins.
Valero’s recent financial performance underscores the pressure. In Q1 2025 the company reported a net loss of $595 million, a sharp reversal from a $1.2 billion net income in Q1 2024, largely due to a $1.1 billion impairment charge on West Coast assets. In Q4 2024, Valero posted a net income of $281 million, down from $1.2 billion in Q4 2023, reflecting ongoing margin compression.
The Benicia refinery’s shutdown will reduce California’s in‑state gasoline supply by roughly 20 % of the state’s total production, raising concerns about price volatility. Analysts project that gasoline prices could rise to $8 per gallon or higher by 2026 if the refinery’s output is not replaced. Governor Newsom’s office has been engaged in discussions with Valero to mitigate supply disruptions and has explored financial incentives to keep the refinery operational.
While imports will sustain supply, the move signals a shift in Valero’s operational footprint. The company’s refining segment has been under pressure, with an operating loss of $530 million in Q1 2025, while its renewable diesel and ethanol segments posted modest gains. The capital reallocation to Gulf Coast assets is expected to improve overall return on invested capital, as those facilities benefit from lower regulatory costs and higher margins.
The announcement also highlights broader industry trends. California’s stringent environmental regulations and high operating costs are prompting other refineries, such as Phillips 66’s Los Angeles plant, to consider closures. The state’s isolated fuel market makes it vulnerable to local production disruptions, underscoring the importance of import strategies for maintaining supply stability.
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