Valero Signals Another California Refinery’s Future In Doubt

(Bloomberg) -- Valero Energy Corp. took a $1.1 billion writedown on its California oil refineries, casting doubt on the company’s future as a fuelmaker in the most-populous US state.

The pre-tax charge reflects Valero’s conclusion that “the carrying values of these assets were not recoverable,” according to a statement Thursday.

The company’s Los Angeles refinery may face a similar fate as a San Francisco-area plant that is slated for permanent shutdown by this time next year, executives said during a conference call with investors. Valero is evaluating “strategic alternatives” for the LA facility, they noted.

Valero, citing high operating costs and burdensome regulation, follows rival California refiners in winding down some operations and curtailing new investment. By mid-2026, the state will have seen almost a third of the refining capacity it had at the start of the decade shuttered. 

The trend bodes ill for California motorists already accustomed to paying the highest pump prices in the nation. Bespoke in-state fuel standards combined with perennial supply disruptions from things like refinery breakdowns expose consumers and businesses to volatile price swings.

California gasoline prices are averaging almost $5 a gallon, more than 50% above the national average. 

Valero executives have met with the California Energy Commission to discuss ways to minimize any impact of shrinking fuel production, General Counsel Rich Walsh told analysts during a conference call.

Earlier this week, Governor Gavin Newsom urged the commission to work with the oil industry on maintaining fuel supplies and in-state refining. 

The San Francisco-area plant that Valero plans to shut by April 2026 can process 145,000 barrels of oil a day. The LA refinery has 85,000 barrels of daily capacity. 

(Updated with comment about “strategic alternatives” in third paragraph.)

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