California Lawmakers Squeezed Refineries Out, Now Scramble To Pay One Well-Known Company To Keep Theirs’ Running

After years of enforcing stringent regulations that helped force major refineries to close, California Democrats are now reportedly considering paying Valero millions to keep a San Francisco-area fuel plant afloat.

With two major refineries already scheduled to shut down and strict regulations in place, concerns about California’s already high gas prices have become a top issue for lawmakers. According to a Bloomberg report Tuesday, sources familiar with the private deliberations said lawmakers have discussed whether to pay Valero between $80 million and $200 million in state funds to keep its Benicia refinery operating.

The Benicia plant is slated to close by April 2026. The proposed payment would be earmarked for routine maintenance, one of the largest costs for refineries, Bloomberg reported.

When asked about the report and how the state has handled the refinery closures, Democratic California Gov. Gavin Newsom’s office told the Daily Caller News Foundation it had no information to share.

Concerns over higher gas prices have mounted due to the scheduled refinery closures, with Republican State Sen. Tony Strickland telling the DCNF that the potential $8-plus per gallon is the “direct result” of Newsom’s agenda.

“With both Valero and Phillip 6 planning to exit California next year, it is predicted by a USC study that drivers will pay $8 plus for a gallon of gas, hurting families that can least afford it and worsening the affordability crisis here. It’s a direct result of this governor’s anti-business agenda and failed leadership. California needs bold, pro-growth policies that make us competitive again—not political damage control,” Strickland told the DCNF.

“Even the California Energy Commission recently voted to quietly pause a resolution that would have imposed government-controlled price caps on our fuel supply for the next five years. That move alone shows they understand how damaging their policies have become,” Strickland added.

Energy expert Ted Cordova also warned during a press conference Monday that the closure of refineries like Phillips 66 and Valero could not only raise prices but also pose a national security risk. (RELATED: Newsom Singing New Tune On Big Oil With Potential Gas Crisis, 2028 Run Looming)

The Valero logo is displayed on a tank at the Valero Wilmington Oil Refinery adjacent to the ports of Long Beach and Los Angeles in the Wilmington neighborhood of Los Angeles. (Photo by PATRICK T. FALLON/AFP via Getty Images)

“Let’s just say PBF in Los Angeles shuts down, P66 shuts down, Valero shuts down. Guess what we’re going to do? We’re going to start shipping gas at $5 to $8 a barrel to get it here,” Ellis said, according to The Sun. “So transportation costs, loading costs, all of those things raise the price. It’s all about logistics. If we can in fact get that volume of reformulated fuel. So it’s supply and demand. You can’t get it, you’re going to pay more for it.”

“We do not have a pipeline to bring our crude and our products from Texas,” Ellis added, according to the outlet. “We are bringing out products from other countries into our ports, and it’s a matter of national security. So you add those two things – national security and the cost of living – we are in a dangerous situation.”

In July, reports surfaced that the California Energy Commission (CEC) had begun seeking help for Valero’s Benicia refinery to halt the impending closure. At the time, a spokesperson for Newsom pointed the DCNF to the governor’s previous comments about working with oil refiners and producers to keep fuel supplies steady, along with his April letter urging the CEC to “redouble” efforts to cooperate with refiners.

According to the American Automobile Association (AAA), California currently has the highest gas prices in the nation, averaging $4.62 per gallon. AAA data shows the state’s regular gas average has risen in the past month from $4.496 to $4.627, though it remains below the 2024 average of $4.711.

Valero did not respond to the DCNF’s request for comment. 

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