By Mike Aldax
Benicia is the latest city facing fallout from California’s shrinking refinery industry, which has dropped from 23 plants in 2000 to just 9 that can produce California gasoline today. The Valero refinery in Benicia, processing about 145,000 barrels of crude oil per day, is set to close by spring 2026. A city-commissioned report projects the loss of more than $10.6 million in annual revenue and up to 1,200 jobs including indirect impacts.
“It’s going to be a significant and seismic shift in the city’s ability to provide services,” Benicia City Manager Mario Giuliani said.
The fiscal hit touches almost every corner of Benicia’s budget: $4.4 million from the utility users tax, $2.6 million in property taxes, nearly $800,000 in sales taxes, and about $3 million from the water fund. The city has asked the Bay Area Air District to redirect part of an $82 million settlement with Valero that is meant for air emission reduction projects to help cover the general fund shortfall.
Benicia’s challenge is part of a statewide trend of refinery closures amid a tough regulatory and political environment. What is unfolding in Benicia, a city of about 27,000, offers a smaller-scale preview of what could happen in the larger City of Richmond if the Chevron refinery there were ever to close or scale back.
Operated since 1902, the Richmond facility can process up to about 256,000 barrels a day, roughly 70 percent more than the Benicia plant, and its influence on the local economy is deep. The company contributed about $59 million to Richmond’s general fund last fiscal year, nearly a quarter of the city’s budget, according to Richmondside reporting.
The refinery fuels one in five vehicles in Northern California, supplies about 60 percent of jet fuel used at Bay Area airports, and 100 percent of the lubricating base oils on the West Coast.
“The total economic impact of our Richmond facilities amounts to $1.1 billion in annual economic activity in the region,” said longtime spokesperson Brian Hubinger. “That’s about 5 percent of local GDP and 3 percent of all jobs in West Contra Costa County.”
The impact is far reaching. Since 2012, Chevron Richmond has invested more than $52 million in local nonprofits and community programs. Its operations sustain contractors, vendors, restaurants, and manufacturers. Richmond’s fiscal reliance on Chevron has only deepened: under a recently approved agreement, the company will pay an additional $50 million annually for the next five years and $60 million annually for the following five to the city’s General Fund. If the City of Richmond budget remains flat, this would increase the share of Chevron’s overall contribution to over one-third of the city’s budget in the years to come.
For some, including Richmond City Council Member Claudia Jimenez, that number isn’t enough. In a statement to Richmondside, Jimenez said “Chevron hasn’t paid their fair taxes to the city in forever.”
Benicia and Richmond’s situations reflect a broader shift in California’s energy landscape. At the state level, refinery closures raise concerns about fuel supply and reliability. According to the U.S. Energy Information Administration, California will lose about 17 percent of its oil-refining capacity in the next year due to the pending Benicia closure and another refinery in Southern California. Yet the state remains the largest consumer of jet fuel in the U.S. and the second-largest consumer of gasoline.
Legislative proposals in Sacramento such as the Polluters Pay Climate Superfund Act could impose fees on the industry to make companies retroactively responsible for costs associated with climate change. Industry leaders warn that adding costs may accelerate more refinery closures, tighten fuel supply, and raise consumer prices.
Even though the State Legislature is not in session, the Richmond City Council took time to adopt a resolution in support of the previously failed legislation despite concerns from industry and labor on the likely negative impact on Richmond and the region’s economy.
Julian Lake of the Bay Area Council warned it might cost up to 200,000 jobs statewide, reduce California’s GDP by $30 billion and slash billions in local tax revenue. The California Center for Jobs and the Economy estimates an annual household burden of up to $3,400, with the greatest impact on renters and low-income residents.
“This isn’t a super fund,” said Rauly Butler of the West County Council of Business and Industry. “This is a tax on production.”
When refining capacity declines, consequences ripple: higher prices at the pump, more dependence on foreign oil and finished transportation fuels from countries with weaker environmental standards, more emissions from long distance transport, and locally, job losses and reduced community investment.
“We’re in a situation where we’re going to have $10 million to $12 million less than last year,” Benicia Mayor Steve Young said. “The hit on the community is going to be severe.”
With a much larger share of Richmond’s budget tied to one company, the impact there would be even greater.
Chevron Richmond says it plans to continue operating and is focused on safely and reliably producing fuels that we use every day while engaging with the community to identify aligned areas of focus for local initiatives.
“As a member of this community for over 120 years, Chevron Richmond remains committed to the region’s economic growth,” said Director Tolly Graves. “Now more than ever, we need to work together to ensure affordable, reliable energy and a stable future for our community.”
