California’s refining capacity is collapsing—not because demand has disappeared, but because it is being deliberately dismantled by regulatory fiat. The recent announcement that Valero Energy will idle or shutter its Benicia refinery by 2026 isn’t just a business decision. It’s the calculated result of a hostile policy environment designed to punish traditional energy producers until they either leave the state or fall into government hands.
Welcome to Newsom’s California, where economic sabotage is spun as environmental justice—and where, quietly but unmistakably, a roadmap is being laid for state-controlled oil infrastructure.
The Valero Withdrawal: Death by a Thousand Regulations
The Benicia refinery, a cornerstone of Northern California’s fuel supply, processes 145,000 barrels of crude oil per day. It’s taken a direct financial hit from California’s mounting anti-oil regulations, including:
- A $1.1 billion impairment charge—a warning siren about future profitability.
- An $82 million air-quality fine, despite the facility operating under existing permits.
- New laws like SBX 1-2, which micromanage fuel inventory, pricing, and even resupply logistics.
These policies are not regulatory oversight—they are operational quicksand. The message is clear: if you’re not making biofuel, you’re not welcome.
Not Just a Shutdown—A Strategic Vacuum
Valero’s exit will eliminate 9% of the state’s refining capacity, triggering ripple effects that Californians will feel directly at the pump. More importantly, the loss of this capacity reduces supply security, amplifies price volatility, and cements California’s growing dependency on foreign imports of refined fuels—a logistical and geopolitical disaster in the making.
Yet Governor Newsom appears unbothered. That’s because this isn’t about fuel security or emissions. It’s about control.
The Smoking Gun: California’s Blueprint for State-Owned Refineries
Buried in the California Energy Commission’s May 2024 Draft Transportation Fuels Assessment is an eye-popping section outlining “highly complex implementation policies” for managing gasoline supply. Among these is a plan for state-owned refineries, described in detail as a fallback option in the event of market “failures.”
Let that sink in.
The state that has spent years making it economically impossible to operate a private refinery now wants to create its own. The very same report recognizes that refineries are shutting down not because demand has disappeared—it hasn’t—but because state policy has made it uneconomical to continue operations.
The report openly discusses how “as demand for gasoline shrinks, refineries may close or convert to processing clean transportation fuels.” But here’s the kicker: the decline in demand is slow and uneven, while supply shocks—thanks to abrupt closures—are “lumpy,” causing instability and risk. The document then lists state takeover scenarios as a solution to this instability.
In other words: destabilize the industry, then nationalize it.
Fewer Choices, Higher Prices, and One Owner
This isn’t a conspiracy theory. It’s policy, in writing, from the California Energy Commission. State officials are laying the groundwork to replace a functioning, competitive fuel market with a government-run enterprise. Think DMV meets gas pump.
And what about the consequences?
- Soaring fuel prices.
- Massive job losses in refining, transport, and supply chains.
- Crippling tax revenue loss for local communities like Benicia.
- Increased emissions from imported fuels and marine transport.
- Higher risks of supply shortages due to bureaucratic mismanagement.
All justified in the name of climate “equity.”
A Power Grab Disguised as Progress
This is not about climate. It’s not even about cleaner air—California’s emissions from transportation fuels are already among the lowest in the nation thanks to past technological improvements. This is about power—concentrated, centralized, and entirely unaccountable.
Gavin Newsom and his allies want to run California’s fuel infrastructure from Sacramento. They want a state monopoly on the means of energy production. If private operators won’t dance to the state’s tune, they’ll be fined, sued, and regulated into oblivion.
And then—when the last private operator gives up—Newsom will declare a crisis and “reluctantly” take over to “protect the public.”
Valero’s Exit Isn’t the End—It’s the Beginning
What’s happening in Benicia is a case study in economic expropriation by regulatory warfare. The goal is not to clean the air—it’s to seize the refinery. Newsom and his bureaucrats have written the playbook, and they’re not hiding it.
The only thing standing between Californians and $10 gasoline—rational policy, free enterprise, and informed resistance—is rapidly disappearing.
This isn’t just bad governance. It’s ideological colonization under the banner of sustainability.
H/T @houmanhemmati
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This is also government policy in other industries, such as medicine.
Use government taxes and regulations to destroy the industry, then declare that since the private market has failed to produce sufficient health care, the government will reluctantly take over.
There’s often misleading calculations, Alberta is in danger of falling for the ‘private auto insurance is more expensive’ fallacy. Sometimes insurance is used a a political pitch or as plain swashbuckling – as Premier of BC Bill Vanderzalm capped car insurance rates, it took a long time for the government insurance system to recover from his reducing income from bad drivers.
Young people have fewer medical expenses compared to the elderly.
Young people tend not to vote. Older people do, in larger numbers.
It’s hardly surprising then, that when they were selling ObamaCare to the masses, one of the features was a requirement that the difference in insurance premiums would be capped at a factor (if I remember right) 3. As a result, the young ended up subsidizing the old.
As a result, once the requirement that everyone has to have insurance was removed, the young dropped out of the insurance system in large numbers.
As a result, the people left in the system tended to be the old and the sick.
It’s no surprise then that insurance premiums have been rising recently.
Of course, the usual suspects proclaim that these increases are due to greed on the part of insurance companies and are proclaiming that only government run health care can solve the problem.
I was born in SoCal in the late 50s but left in 96 due to business. Once Reagan left as governor the state started its decline in all areas. This move to end oil and gas production in state will further kill the state. The state ended much of the way it has produced energy and moved toward “green energy” only but it is failing to give enough energy to the state. EV autos can not be paid for and powered up through out the state. Also EV Semis and Trucks are not viable. Politicians in California are all Dems and are set to destroy the state.
I moved there in 1973 to teach at UCLA in the health sciences. It was a golden period that lasted through Wilson then started downhill.
Newsom must have been taking lessons from Chavez and then Maduro in Venezuela on how to completely ruin an oil industry and also a state.
Eventually everything will come apart.
I read that 40% of Californians voted for Trump so maybe there’s hope for the future.
Arnold S got elected on a promise to get state finances back under control – but didn’t. Incompetent!
Arnold was a disaster! He is also a global warming nut.
Incompetent? Check out his wife’s family name, see where that leads.
Calizeula here we come.
LA wildfires are a harbinger.
One can only imagine how people would FLOCK out of that state if that happened. Let it happen and pass the popcorn please!
NOOOOOOO! Some of them will move to my state, and wreck IT with their crazy Commifornication!
People have been leaving California for many years, I new a family that moved to Indiana to get a better life for their children. High earners have been moving to Texas – did Elon Musk? (Note crime is high in SF and LA, though also high in Portland OR.
The California exodus has affected Arizona voting patterns: we now have Democrats in the top 3 positions of governor, Sec of State and Attorney General, plus both US Senators.
As to the oil business, AZ gets ~ 1/2 of its gasoline from California, thus we pay more than the national average.
The idiots that run that state cause havoc well beyond its borders.
That has more to do with Democrat voter fraud.
Gee! What a surprise! A state that is openly hostile to most entrepreneurs and small businesses, thinks that it is a good idea for inept politicians and bureaucrats to refine oil products! What could possibly go wrong?
After Newscum finishes consulting with Maduro on raising refinery output, he might want to meet with President-for-Life Xi about acquiring troops to protect him from the mobs of domestic terrorist soccer moms and dads intent on outfitting him with new neckwear! This should pretty much kill any chances of higher political office for the Slickster, unless he wants to become a high muckety muck in the CCP pantheon by turning Commifornia a deeper Red!
The idea that California government hacks can operate gas refineries has me in stitches.
This is good news long term for California… the sooner they find rock bottom the sooner things will get better.
Marxists of USSR couldn’t run refineries well, depended on US expertise – Americans built their refineries in the first place.
The USSR was pouring gasoline down abandoned well drilling holes, because it couldn’t alter refineries to shift balance of light fuels with heavy. Not many cars in the Soviet Union but many diesel engines and building furnaces.
If Valero indeed closes the plant, finding an industry buyer stupid enough to buy it for more than scrap metal price will be almost impossible. They should dismantle and ship out any high value process units, then scuttle / implode the rest so that nobody can own and run it.
This can set the pattern for the remaining refineries as they succumb to Commie-fornia government.
Let them eat batteries!
I worked for Duke Energy in the 1990s when they foolishly thought they could buy, modernize and expand gas-fired power plants. They planned to replace old, inefficient plants with high efficiency, lower emissions combined cycle gas plants. Predictably, government and private forces shut down these ideas, so Duke cut and ran. The new buyers couldn’t make a go and shut down the plants permanently. Now the state is wanting to use the grid connections of those coastal plants to tie in offshore wind (as if that’ll ever happen).
The handwriting for California is on the wall:
”25 And this is the writing that was inscribed: Mene, Mene, Tekel, and Parsin. 26 This is the interpretation of the matter: Mene, God has numbered the days of your kingdom and brought it to an end; 27 Tekel, you have been weighed in the balances and found wanting; 28 Peres, your kingdom is divided and given to the Medes and Persians.” (Daniel 5:25-28)
I also worked for Duke Energy in Washington State. So I watched with interest as Duke did great things in the rest of the country but had huge problems with the politics in Califonia.
This was after the nuke plants I worked at in Califonia closed and my job at GE Nuclear in San Jose went away because of Clinton policies.
Moving from Califonia was a low point in my life. Thirty years later it was the best thing that could have happened.
California has become the ‘no’ state.
Agreed. They should cut out the valuable pressure vessels to be used elsewhere or sold. Then Newsome will be left with a bunch of piping he can use however he wants.
And what about the consequences?
Err…Cons…’There are complex industrial processes that the State has no experience in managing’
What could possibly go wrong?
Based on past performance, about the only guarantee is that no matter what goes wrong Newsome will blame it on climate change.
“This is not about climate. It’s not even about cleaner air—California’s emissions from transportation fuels are already among the lowest in the nation thanks to past technological improvements. This is about power—concentrated, centralized, and entirely unaccountable.”
In a nutshell, it’s called Marxism. Pure and simple.
The Glorious Marxist-Socialist Workers’ Utopian State of California. They need to add a hammer and sickle to their flag and hoist it over the state legislature in Sacramento.
Certainly is a control-minded collectivist power grabber.
As is the present PM of Canada who said private enterprise does not step up in a crisis.
They are Marxists at root.
PM’s opponent in upcoming election is much better, he’s not a Milei in economic depth but not a chainsaw wielder either.
(Milei has Argenta’s inflation way down, is close to stabilizing currency, …. Argentina was in desperate condition.)
“In Economics in One Lesson (1946), Henry Hazlitt distinguishes between scientific and nonscientific methods in economics, but his distinction applies as much to other fields. “The bad economist,” he writes, “sees only what immediately strikes the eye,” while “the good economist also looks beyond.”
In Yes, Follow the Science – in Every Field, The Atlas Society | Ayn Rand, Objectivism, Atlas Shrugged.
https://whittakerchambers.org/articles/nr/bigsister/
Chambers’ famous review, from National Review 1957, of Atlas Shrugged. All that needs to be said, really, about either it or Rand.
The news about this book seems to me to be that any ordinarily sensible head could possibly take it seriously, and that, apparently, a good many do. Somebody has called it: “Excruciatingly awful.” I find it a remarkably silly book.
[……]
Something of this implication is fixed in the book’s dictatorial tone, which is much its most striking feature. Out of a lifetime of reading, I can recall no other book in which a tone of overriding arrogance was so implacably sustained. Its shrillness is without reprieve. Its dogmatism is without appeal. In addition, the mind which finds this tone natural to it shares other characteristics of its type. 1) It consistently mistakes raw force for strength, and the rawer the force, the more reverent the posture of the mind before it. 2) It supposes itself to be the bringer of a final revelation.
Therefore, resistance to the Message cannot be tolerated because disagreement can never be merely honest, prudent, or just humanly fallible. Dissent from revelation so final (because, the author would say, so reasonable) can only be willfully wicked. There are ways of dealing with such wickedness, and, in fact, right reason itself enjoins them.
From almost any page of Atlas Shrugged, a voice can be heard, from painful necessity, commanding: “To a gas chamber — go!” The same inflexibly self-righteous stance results, too (in the total absence of any saving humor), in odd extravagances of inflection and gesture — that Dollar Sign, for example.
At first, we try to tell ourselves that these are just lapses, that this mind has, somehow, mislaid the discriminating knack that most of us pray will warn us in time of the difference between what is effective and firm, and what is wildly grotesque and excessive. Soon we suspect something worse. We suspect that this mind finds, precisely in extravagance, some exalting merit; feels a surging release of power and passion precisely in smashing up the house.
And works to shut down nuclear power plants.
I’m ROLF at the Goonvenor trying to entice Canadians to visit California for the sun, wine, and beaches.
Failing to grasp that the Okanagan Valley of BC is quite warm in summer, grapes grow there from which wine is made, and lakes with beaches. Vancouver BC has nice beaches, with shallow water warmed by the sun and by tide coming in over hot sand.
Perhaps he’ll have more success with his pitch come October if Trump quits playing games.
These companies own multiple refineries in multiple states. They need to be sure that when they shut down one of the CA refineries that equipment is ripped out and warehoused for spares at another location. Platinum catalysts typically cost hundreds of dollars per pound and are inventoried literally by the 10s of tons in a refinery. Those catalysts are fungible and need to be stripped out and either sold or reused elsewhere. Those trays in the crude still? Hey man, that’s a couple of tons of 316 stainless steel that would bring a decent chunk of change if sold for scrap. Oh, and then all the instruments, valves, computer control systems, UPS systems, Switchgear,. All reusable – somewhere out of state.
Yeah, you may not be able to burn it down like in Atlas Shrugged, but you can dam well make sure it’s never going to run again.
One party states are famous for taking control of business operations.
There is not a one party state that ever existed that did it otherwise.
Communist states run it themselves while fascist states tell their owners/buddies how to do it.
So what else did you expect from a one party state?
Somebody gets it.
“Communism, a political and economic doctrine that aims to replace private property and a profit-based economy with public ownership and communal control of at least the major means of production” – Britannica
Fuel rationing will be next. Will there even be any opposition to this power grab?
The problem with the notion of “communal control” is that it is impossible. Do they really plan on polling the entire population every time the factory needs to make a major decision?
Why does anyone expect that the decision of thousands of people with no knowledge whatsoever of the industry or factory in question are going to make wise decisions
Beyond that, why should anyone believe that people who will suffer no consequences for being wrong, will even try to make the best decision.
Now multiply those problems across the thousands of industries and the millions of factories, distribution centers, stores, restaurants, etc. that make up an economy.
Communism is one of those theories that is so stupid that only an academic can be fooled by it.
Socialism suffers from many of the same problem, however instead of total ownership, by government, you merely have government making all of the major decisions.
Story tip: https://www.bakersfield.com/news/rosedale-refinery-files-chapter-11/article_5ac720a7-7ab8-41bd-8871-ad39ee03691d.html
As a Californian refugee, I’m all for this. Let the smart people who haven’t demonstrated competence in running anything else in the state run California’s energy chain into the ground. It may be the only thing that finally gets California voters to run the Progressives out of office.
Didn’t leave deliberately. Bought a place in south-east Arizona. Then a letter from the CA DMV for my wife, “Show up in person to renew your licence”. A 300 mile round trip. There’s an Arizona DMV 16 miles away. So we became Arizona residents on January 1, 2013.
By the way John, you also know Stilton?
Yes. We ought to have a secret handshake or something.
Keep on keeping on.
California is toast. There are just too many people here who have signed up to suspend their belief in engineering and practical realities. They will drive the once thriving economy into the ground and they will do it by continuing their insane immigration, housing, energy and healthcare policies.
They are convinced that high gasoline prices in CA are the fault of Big Oil. They know that high electricity rates are due to excess profits by PG&E and SoCal Edison. Newsom told them so and it must be true.
If they think energy is expensive now due to corporate greed, just wait until they see how expensive it is when the state is running things. At least they can now buy gas at $5-a-gallon.
It is its own punishment. State owned businesses will work no better in California than they did in the Soviet Union. There will be shortages, financial losses, rationing, fraud, theft, and sooner, not later bankruptcy. Have fun folks.
A refinery has huge 50 to 100 thousand hp compressors and heat exchangers everywhere. No trouble selling these to Asia for big $$. Load it all on a heavy lift ship to build another refinery across the Pacific.
Paper ballots are the first step to the fix here; who actually believes these idiot politicians are being elected?
Local California experts predict price hikes of 10-30 cents/gal. Imagine if Valero or another refiner made changes that caused a consumer price hike like that…Newsom would demand a congressional investigation for price gouging.
Newsom doesn’t care about the impact to his own residents or his neighbors. Nevada and Arizona get over 30% of their fuel from California and those governors have talked to Newsom about the negative impact in their states from the closure of Valero’s refinery. No matter.
If Newsom is doing this because of climate change or to save the environment that is a joke. The fuel shortfall will be replaced mostly by tanker imports (at higher cost) which will increase emissions and contradicts California’s climate policy mandates. Again, imagine if Valero announced they were going to start importing oil instead of using California crude in their refinery. Would Newsom object to that? I’m betting everyone knows the answer.
The FDA needs to investigate if excess use of hair gel and teeth whitening strips can cause lobotomy-like behaviors.
In the UK about as soon as the plant has cooled down, our coal power stations have been blown up. Perhaps Valero should follow the same scorched earth policy and demolish their refinery before Governor Hairgel can get hold of it.
Running all businesses out of the state except the movie business which Newsome has proposed needs more subsidies.
The exodus out of California is taking a lot of brainpower with it, so the decline should accelerate.
Let them take over the refineries. They won’t be able to run them and only hasten the disaster on the horizon. If I was Valero, I’d start dismantling the refinery as soon as it is shut down and sell off the pieces.
This is California. After a refinery ‘take-over’ they’ll probably want new employees. Hired using DEI standards?