Valero Eats $1.1 Billion Loss to Escape Newsom’s Toxic California

Valero Eats $1.1 Billion Loss to Escape Newsom’s Toxic California

Before handing Gavin Newsom the Democratic presidential nomination in 2028, Democrats may want to pause and consider his long record of failure in California. From his mishandling of the January wildfires to his coddling of illegal immigrants, his poor governance has led to a collapse of public confidence and a mass exodus from the Golden State.

But buried beneath the broader criticism is an often overlooked central failure: Newsom’s policy decisions have made California an increasingly hostile state in which to conduct business. And few industries have suffered more under California’s regulatory assault than fossil fuels, where relentless overreach has driven companies out of the state. The latest major corporation to join the stampede is Valero Energy. The company is so determined to flee California’s overregulation that it was willing to absorb a staggering $1.1 billion loss to get out. Valero will shutter operations by April 2026.

Because other energy companies have already left California, Valero’s exit will put even greater upward pressure on gasoline prices in the state, which are already among the highest in the nation.

The video below from widely followed X account @WallStreetApes explains the current situation:

Valero just wrote off $1.1 billion. That is the cost they are taking to walk away from California rather than keep operating their Benicia refinery past April 2026.

When a company takes a billion dollar loss just to leave, you know something is seriously broken.

This facility processes 145,000 barrels of oil per day, representing 8.6% of California’s entire gasoline production. 400 workers have lost their jobs. 200 contractors are out of work.

The city of Benicia loses 17% of its entire budget, and California drivers, they are about to get hammered with the worst gas prices in American history.

University of California Davis economists calculate a 40 cents per gallon increase the moment Phillips 66 closes their Los Angeles refinery this December. Then another 81 cents when Valero shuts down four months later in April. That totals a $1.21 per gallon increase by August 2026, your 15 gallon fill-up jumps from $70 to at least $95.

The Stanford Energy Institute came up with even worse projections. They are showing potential spikes to $8 per gallon during supply disruptions.

UC Berkeley’s Severin Borenstein, who has been tracking California energy markets for decades, warns these closures could create severe gasoline shortages with unprecedented price increases.

There is an added wrinkle — a major one. In an attempt to reduce air pollution and greenhouse gas emissions, the state has mandated the use of special blends of gasoline, which are known as “CARBOBs — California reformulated gasoline blend stock for oxygenate blending. This is not regular gasoline. It is a specialized ultra clean burning fuel mandated by California law.”

These blends cost substantially more to produce than regular gasoline due to their added complexity.

Unlike other states, California’s special fuel blends cannot be imported from major U.S. oil-producing states such as Texas, Oklahoma, or Louisiana when inventory runs low. Instead, supply comes largely from a shrinking number of in-state refineries or from a handful of foreign refineries — primarily in countries like South Korea, India, and Singapore — that have the specialized equipment needed to produce CARBOB fuel.

The long-distance transport, exposure to global supply-chain disruptions, and added logistical costs all drive prices higher — costs that are first borne by corporations and ultimately passed on to California consumers at the pump.

Valero is taking a $1 billion dollar loss just to get out of California by April 2026

The company will not comply with Gavin Newsom mandates and instead is willing to lose a billion dollars to leave

“When a company takes a billion dollar loss just to leave, you know something… pic.twitter.com/9xpPBWd4fu

— Wall Street Apes (@WallStreetApes) December 14, 2025

Leslie Eastman has reported frequently on the flight of energy companies out of California over the past couple of years. She covered Chevron’s departure here and here — as well as Valero’s initial announcement of its decision to shutter its Benicia refinery.

Leslie also wrote about Newsom’s approval of an order to force energy producers to stock pile gasoline, a measure that led Phillips 66 to announce it would end “operations at its Los Angeles-area refinery in the fourth quarter of 2025.”

Needless and ill-considered policies like this are driving energy companies out of California, one regulation at a time.

But the exodus has not been limited to energy companies. Below is a list of other corporations that have left to escape California’s unfriendly business climate in recent years.

We can now add Valero to the growing list of major companies fleeing California, taking well over $1.3 trillion of revenue with them. Great job Newsom!

• AECOM
• Align Technology, Inc.
• Amazing Magnets, LLC
• Amgen Inc.
• Anduril
• Bed Bath & Beyond
• Blaze Pizza…

— BlackApple (@BlackApple) December 14, 2025

These corporate departures are not abstract losses — they are steadily hollowing out California’s tax base. In a state where the top 1 percent of taxpayers generate nearly half of all income tax revenue, the flight of high earners and major employers carries severe fiscal consequences.

Those consequences are now impossible to ignore. Just last month, CalMatters projected an $18 billion deficit for the 2026–27 fiscal year, the fourth major shortfall in as many years. The nonpartisan Legislative Analyst’s Office has warned that California faces “potential structural deficits of $15 billion to $35 billion annually through 2028–29,” a sign not of temporary turbulence, but of deep and persistent mismanagement.

This is the legacy of Gavin Newsom’s governance: a state hemorrhaging businesses, eroding its revenue base, and lurching from one budget crisis to the next. California was once an engine of growth and opportunity. Under Newsom, it has become a cautionary tale.

If this is the model of leadership Democrats intend to export to the nation, voters should ask a simple question: why would anyone entrust the presidency to the man who helped drive the country’s largest state into fiscal and economic decline?

Elizabeth writes commentary for Legal Insurrection and The Washington Examiner. She is an academy fellow at The Heritage Foundation. Please follow Elizabeth on X or LinkedIn.

Donations tax deductible
to the full extent allowed by law.