By Terence Bennett
Published in the Benicia Herald
The dominant narrative around the Valero Benicia Refinery closure goes something like this: California's regulatory overreach drove another oil company out of the state, and working families will pay the price. It is a tidy story. It is also largely wrong.
The evidence points to a different conclusion, one that should give Benicia residents reason for cautious optimism rather than despair. Valero is not being driven out of California by regulation. It is making a rational business decision to exit an aging site and capture the full value of 930 acres of Bay Area industrial-zoned land on the way out. The high price the company demanded from potential buyers, a price no refiner was willing to meet, tells you everything about how Valero sees the real value of this property.
Start with the timeline. Within two weeks of announcing the closure in April 2025, Valero engaged Signature Development Group, one of the Bay Area's premier large-scale developers. Signature's portfolio includes Brooklyn Basin on Oakland's waterfront and Willow Village in Menlo Park. These are not the partners you call when you are abandoning a state. These are the partners you call when you are unlocking land value. Valero then granted Signature an exclusive negotiation window and accelerated the closure by four months. That is not a company being chased out. That is a company moving quickly to cash out.
The failed sale attempts confirm it. When HF Sinclair entered acquisition talks in summer 2024, they collapsed over an environmental issue at the site. When the state scrambled to find other buyers, none came forward, even with massive subsidies on the table. The gap between what Valero was asking and what any refiner would pay was not a failure to find a deal. It was evidence that Valero had already decided the land was worth more than the business.
That gap is the most telling detail in this story. If regulations were the primary obstacle, a subsidy would fix it. If the asking price reflected what the property is worth as a refinery, a buyer would have emerged. Neither happened. When you price a property beyond what any operator in your own industry will pay, you are looking for a different kind of buyer.
To be clear, this is not about assigning blame to the hundreds of dedicated workers who showed up every day and did their jobs well. Many are our neighbors and friends. The reality is structural. The refinery was built in 1968. After 57 years of continuous operation, the site carries the kind of accumulated environmental and maintenance challenges any facility of that age would face. A Stanford University analysis found that newer refineries have meaningfully lower production costs.
The refinery also sits less than a half mile from residential homes. This fact, more than any regulation, may be the single most important factor in the story. The city grew around the facility over decades, creating a structural reality: operating a refinery next to neighborhoods is inherently more complex, more expensive, and more liability-prone than operating one in an isolated location. Every incident affects real families. Every compliance requirement carries higher stakes. For any potential buyer, that proximity represents ongoing risk no subsidy can offset. For Valero, the math was straightforward: sell at redevelopment value and exit the site entirely.
So why did Valero publicly blame California's regulatory environment? Because the narrative serves the company's interests on multiple fronts. It provides leverage in other states where Valero still operates. It shifts public sympathy away from scrutiny of the sale terms. And it pressures Sacramento into concessions, as we saw when legislators briefly considered handing Valero up to $200 million in subsidies to stay. If regulation were truly the cause, Valero would not still be operating its Wilmington refinery in Los Angeles County. Blaming regulation is strategy, not confession.
Understanding this changes everything about how Benicia should respond. If the refinery closed because regulation made business impossible, then the site is a liability and the city is a victim. But if the refinery closed because the land is extraordinarily valuable, then Benicia is sitting on one of the most significant redevelopment opportunities on the West Coast. Nine hundred thirty acres with deep-water port access, rail, freeway connectivity, and a location between Silicon Valley, San Francisco, and Sacramento. That is not a burden. That is leverage.
The demand is already building. A national surge in advanced manufacturing driven by reshoring, robotics, and semiconductor expansion is pushing industrial vacancy to historic lows. Whatever your opinion of California Forever and its plans for eastern Solano County, one thing is hard to argue with: the timing is fortunate for Benicia. The proposed Solano Shipyard near Collinsville and the 2,100-acre Solano Foundry advanced manufacturing park signal that serious capital sees this region as a future hub for defense, robotics, and high-tech production. Those projects will need supply chain facilities, component manufacturers, and logistics operations. Benicia does not need to bet on any single project, but it would be a mistake to sit still while industrial demand builds around us.
The greatest risk is not the closure itself. It is delay. Every month Benicia spends mourning the refinery instead of planning its replacement is a month lost to competitors who are already courting the same manufacturers and logistics operators. The city should be fighting for accelerated environmental remediation, asserting its zoning authority over what comes next, and making it clear to Valero, Signature, and Sacramento that this community intends to shape its own future.
Benicia has reinvented itself before. The refinery gave this community a great deal over 25 years of Valero's stewardship: jobs, tax revenue, charitable support, and a sense of identity. We can be grateful for that chapter while recognizing the next one has the potential to be even better. But only if we start now, and only if we begin with an honest accounting of why the refinery is really closing: not the version that makes for convenient politics, but the version that helps us build what comes next.