Valero Restarts Benicia Refinery, Further Easing Statewide Gas Price Spike

Valero is restarting its Benicia refinery more than 40 days after a major malfunction and pollution release forced the energy giant to shut down the facility, contributing to the state's recent spike in fuel costs.

"The Valero Benicia refinery has commenced the startup process, which is a multi-day sequenced event," the company said in a notification sent to Benicia city officials over the weekend. The message warned of potential "visible, intermittent flaring" as a necessary safety precaution.

That flaring began Tuesday morning, according to a state hazardous materials database, and included a release of sulfur dioxide. The Bay Area Air Quality Management District sent staff to the refinery to observe the flaring, said agency spokesman Ralph Borrmann.

Valero has also been in touch with the Benicia Fire Department about the startup and flaring, according to Fire Chief Josh Chadwick.

Valero shut down the refinery on March 24 after ongoing equipment problems.

The air district, along with California's Division of Occupational Safety and Health (Cal/OSHA) and Solano County inspectors, has been investigating the refinery's problems since then.

The focus of the county investigation centers on two key refinery components that malfunctioned, allowing petroleum coke (petcoke), an oil processing residue, to escape.

For several hours on March 24, county officials issued a health advisory, warning residents with respiratory issues to stay indoors.

The petcoke releases later prompted Benicia's mayor and air quality advocates to call for local air regulators and the city to create a more robust and coordinated strategy to measure what gushes out of the refinery. Two years earlier, the same facility experienced a full outage and a much more extreme pollution release.

The air district, which issued 12 notices of violation against Valero for the most recent releases, does not have a stationary air monitoring device in Benicia's residential areas and had to drive a van to the area to monitor the situation.

The shutdown took place several weeks after California's gas prices began to increase.

Energy experts correctly predicted that the refinery's problems, coupled with maintenance issues at several other California refineries, would prompt an increase in crude oil prices.

The average cost of a gallon of unleaded gasoline in California on the day Valero shut down its Benicia refinery was $3.49, according to the American Automobile Association. It has increased by more than 60 cents since then, and on Tuesday stood at $4.10.

Last month, Gov. Gavin Newsom ordered the California Energy Commission to investigate the hikes.

But the average price increases have slowed in recent days, and an AAA representative said Tuesday that costs may be beginning to stabilize.

"The news about Valero was actually a pretty big reason for the prices evening out," said AAA Northern California spokesman Mike Blasky.

He said just the talk of the Benicia refinery restarting contributed to a recent 8-cent drop in the average wholesale cost of a gallon of gas.

"When those units do restart, that's going to really contribute to a higher utilization rate, which will lower prices as we see our stocks resupplied," Blasky said. "Any major refinery shutdown in California tends to really throw things out of whack."

KQED's Peter Jon Shuler contributed reporting to this story.