Valero Refinery: State lawmakers consider big bailout to prevent Benicia plant from closing next year, report says

BENICIA, Calif. (KGO) — The Valero Refinery in Benicia is slated to close next April. But state lawmakers may be stepping in to help. California could pay hundreds of millions of dollars to cover maintenance costs at Valero’s plant, according to Bloomberg.

Benicia is home to 26,000 people. Its biggest employer is Valero Energy Corporation with about 400 workers.

Valero also produces about 9% of California’s gas.

The oil company has plans to close by next April, partly because of a massive fine for unlawful toxic emissions.

But now, California could help prevent that closure.

MORE: Valero may close Benicia refinery by next year, citing CA regulations and high costs

According to Bloomberg, state lawmakers are negotiating to pay hundreds of millions of dollars to Valero Energy corporation.

The proposed bailout of $80 to $200 million would help pay for maintenance costs at the plant that was built in 1968.

We asked city leaders in Benicia about the proposal.

“The city supports anything that the legislature or the governor is willing to do in order to incentivize the Valero Benicia refinery to maintain its operations…if they were to close, we’d experience a 10-12-million-dollar annual shortfall,” said Sarah Shawky, Deputy City Manager of Benicia.

“At the end of the day, keeping a refinery open in California is more key than anything else.”

Patrick De Haan is head of petroleum analysis with GasBuddy.

“California have been really pushing their refineries to the limit. This is the second potential closure or refinery in the last 6 months,” said De Haan. “California has long had very restrictive rules and regulations when it comes to refineries and some of them have had enough.”

MORE: How would the potential closure of the Valero Benicia Refinery impact gas prices?

De Haan says California is doing “an about-face and stepping in to keep refineries from shutting down.”

Refineries shutting down would have serious impacts on motorists.

According to economic experts, gas prices could go up to nearly $8 a gallon if the Benicia plant and another refinery, Phillips 66 in Los Angeles both close.

MORE: Flaring at Valero Refinery due to mechanical issue with nitrogen plant

Gas experts say the proposal to keep Valero refining open may set a precedent for others to follow.

“It’s creating an environment in California that refineries want to do business. California has to start easing back on its hostile environment for refineries. (Then) it doesn’t have to make any handouts at all,” said De Haan.

“Because of the legislation that has been passed to make it even more strenuous for the oil industry’s operations in the State of California, I think it makes sense that they provide part or all of the solutions,” said Shawky.

ABC7 News reached Valero and state lawmakers for comment. They have not responded.