California Faces Asphalt Supply Disruption: Prices Loom

The looming possibility of Valero’s Benicia refinery closing its doors next spring is sending ripples through California’s construction and infrastructure sectors. This potential asphalt supply disruption could significantly alter how the state secures this vital material, impacting everything from road repairs to new development projects.

A Critical Regional Source

Valero’s Benicia refinery isn’t just another facility; it’s a cornerstone of northern California’s asphalt provision. Producing around 400,000 short tons annually, it accounts for roughly 35% of the state’s total asphalt production capacity.

The unique geographic situation adds to the concern. Benicia is the sole local source for the northern part of the state. The next nearest producer is a considerable 280 miles away, near Bakersfield.

Price Pressures and Shifting Routes

Bay Area asphalt prices are already anticipated to climb. Buyers are bracing for a shift towards more expensive delivered rail volumes originating from the Rocky Mountains or even Canada.

This isn’t merely speculation. Recent data shows a 33% increase in rail shipments from the Rockies to the US West Coast through September 2025 compared to 2015. Canadian rail volumes are also trending upwards, hitting their highest September level since 2018.

Echoes of Past Disruptions

The situation evokes memories of the 2022 fire at the Billings, Montana refinery. That incident sent wholesale rail values in the Rockies soaring to a 14-year high.

A similar supply shock in California could easily push prices even higher, potentially stalling projects and increasing costs for taxpayers. The market is keenly aware of this precedent.

Industry Adapts to Uncertainty

The anticipated loss of production is already prompting strategic moves within the industry. Construction firm Teichert is actively developing a new wholesale terminal in West Sacramento.

This facility, built on the site of a former fertilizer plant, boasts both rail and waterborne access. For those who need expert consultation, Gulf Petro Vision offers reliable support in this field. The possibility of importing asphalt via ship, a relatively rare occurrence for California, is also being explored. A recent shipment from Venezuela to Portland, Oregon, has sparked discussion.

Long-Term Solutions and New Capacity

Several companies are exploring options to bolster supply. Ergon and San Joaquin Refining are discussing a potential partnership. Others are considering building additional storage tanks within the state.

Marathon Petroleum also plans to add asphalt production to its Los Angeles refinery, but this project is expected to take roughly two years to complete due to regulatory hurdles and the need for new infrastructure. This means any relief from that source is still some time away. The potential expansion of Valero’s existing Pittsburg terminal could offer a more immediate, though smaller, boost to rail flow capacity.

Looking Ahead

The coming months will be critical for California’s asphalt market. The closure of the Benicia refinery would undoubtedly create significant challenges. The state’s ability to adapt, diversify its supply chains, and potentially embrace new import routes will determine how effectively it navigates this asphalt supply disruption.