Is California Prepared For Refinery-Closure Fallout?

When owners of the Valero refinery in Benicia recently announced the facility would be closing in 2026, the first reaction of many was to worry about the impact on gas prices. Understood.

But the bigger wake-up call should be that California is not prepared for the wave of Bay Area refinery closures that are likely to happen soon, putting thousands of blue-collar workers out of work and costing local communities millions of dollars in tax revenue.

Everyone wants the cleaner environment that a renewable energy world promises. But let's not forget one human aspect of that change.

Environmentalists and elected leaders — mostly Democrats — often speak of a "just transition" for fossil fuel industry workers displaced when their jobs disappear as entities pivot toward renewable resources. In his 2020 executive order requiring that all new passenger cars and trucks sold in California be 100% zero-emission by 2035, Newsom called for the state to "support workers and job retention and creation as we make a just transition away from fossil fuels."

But analysts say there is little evidence that the government, or the private sector, or anyone, is ready to help workers displaced by the transition.

Between Newsom's order and what refiners say is the high cost of complying with the state's environmental regulations, analysts say it is likely that the Bay Area's remaining refineries will likely soon shutter.

In January, the San Francisco Bay Area Refinery Transition Analysis — written by a coalition of union and environmental justice advocates with the UC Berkeley Labor Center — anticipated "that a 65% to 92% reduction in (refinery) production capacity is likely by 2045. By that time, the region may have one large or two small oil refineries to serve the remaining market, or no oil refineries at all, depending on the pace of transition." There are 3,000 direct and 15,000 indirect jobs in Contra Costa County related to the refineries there. Cities in the county receive $136 million in direct taxes from the refining industry and $836 million in indirect tax revenue.

Valero contributed about $7 million to Benicia, which has a $60 million general fund budget, in property and utility user taxes and another $2.9 million toward its enterprise fund, which goes toward water and wastewater treatment, City Manager Mario Giuliani told me. The city could lose another $5 million to $6 million in hotel and sales tax dollars, Guiliani said, because "many of our hotel stays are from contractors that work at Valero." He said Valero's exit will also have a "dramatic" effect on other businesses in town, "in particular many of the businesses in our industrial park that support the petrol-chemical industry. We are still working to do that analysis, but I would guess our industrial park businesses will lose $75 million to $100 million in annual revenue," Giuliani said. Plus, "our school district could lose $2 million to $3 million in property tax revenue each year."

So far, the "just transition" is an empty promise. The Benicia closure may be good for Valero shareholders, but not the people who actually did the hard work there or the surrounding community.

Not that Valero was a perfect neighbor. Far from it. One upside from its pending departure is that the city's major polluter will be gone. Last year, regional and state air-quality regulators handed Valero Refining Co. a nearly $82 million penalty for "egregious" emissions problems at the refinery, which for 16 years spewed illegal amounts of cancer-causing gases and chemicals into the air.

And let's be real. Valero is leaving because it can't make as much money as it wants to. According to its earnings report issued last week, the company stated that "California adopted legislation that has subjected our refining and marketing operations to potential increased operational restrictions and new reporting requirements. The considerable uncertainty and potential adverse effects on our operations and financial performance resulted in the evaluation of strategic alternatives for our operations in California."

Oil companies like Valero spent more than $17 million lobbying the California government last year, according to a recent CalMatters analysis — the most of any entity. After wielding all that influence and not getting the desired results, the company is packing up.

For the 400 permanent employees at the refinery and hundreds of contract workers, there is no "transition" plan when the plant closes next year. But there will be considerable uncertainty and potential adverse effects. Union officials said some workers have been offered jobs at Valero facilities in other states, which would mean uprooting their families. Valero did not respond to requests for comment.

"We do not currently have the plans in place to ensure a just transition, but we have learned a lot over the last couple of years about and learned from workers and communities who've been affected by closure so far about what a transition can and should look like and how to actually make it happen," Jessie Hammerling, co-director of the green economy program at the UC Berkeley Labor Center, told me.

It's another example of elite Democrats ignoring or downplaying the plight of blue-collar workers — one of the many things that cost them the November election. Former Vice President Al Gore didn't mention displaced blue-collar workers during his fiery, Trump-bashing keynote speech at Climate Week in San Francisco last week.

Refinery work is among the few blue-collar jobs in the Bay Area that pay enough for workers to afford to buy a home — and get a pension after a rare "lifetime job," as union leaders like to say.

Mark Felsoci, 63, has worked at Valero for 28 years as a crane operator who contracted there. He made enough — $186,000 last year, more than $200,000 in others, depending on overtime, "and never less than $100,000," he told me — to buy a house in Benicia and raise his family there. He was able to help his daughter pay for cosmetology school and his son work toward a speech pathology degree.

Many crane operators have to "chase the work" — move or commute for hours to work sites far from their home. Those gigs might last a year or two, or maybe six months. Having a steady job at the local refinery enabled Felsoci to be home in time for dinner, chaperone school field trips and do many of the things that white-collar workers — the work-from-home crowd — take for granted.

Yes, Felsoci acknowledged, Valero has had its problems in the past, but he felt safe working there: "You think I'd work here if it was unsafe or it was contaminated? Do you think I'd raise my children in this environment if it was so unsafe and the contamination was as such?"

Plus, the crane operators he worked alongside for decades "were like family," he said. They watched each other's kids grow up. In fact, he worked there so long that he saw a couple of co-workers' sons grow up to work alongside their dads.

When refineries close, Felsoci said there is no "just transition" to green energy jobs like politicians often claim. "That's a farce," he said.

For starters, he said, the skills that refinery workers honed — many after yearslong apprenticeship programs — aren't easily transferable to building solar panels or other renewable energy jobs as the term "just transition" might imply.

"'Just transition' is BS, OK?" Felsoci said. "What happens is, if the jobs are out there, you'll get them. But if they're not out there, excuse my French, you're s— out of luck. So what happens? You draw unemployment, and you wait till the next job comes."

Landing that next gig could take a while — and it usually isn't as lucrative. Just ask the former workers at the Martinez Marathon Oil refinery. After the refinery closed in 2020, 22.5% of the workers were not employed but actively searching for work, according to a survey and interviews done by the UC Berkeley Labor Center. Those who found work typically found "themselves in jobs that pay $12 per hour less than their Marathon jobs, a 24% cut in pay," the study found.

"These guys that are putting up these solar panels or working in solar fields, they're probably making half (of what refinery workers do). They don't get the benefits," Felsoci said. "So you can transition from this job and become a janitor. And, God bless them, they do a wonderful job, too. But let's make comparisons, apples to apples, oranges to oranges. You can transition to anything you want, but it's going to pay way less than what you were ever doing before."