Valero, PBF: No New U.S. Refining Capacity, Despite Pump Prices

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Written by Will Ploch, Assistant Editor-in-Chief for IIR News Intelligence (Sugar Land, Texas)

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Summary

There are no easy answers to higher prices at the gas pump, as two leading companies in the U.S. Petroleum Refining Industry acknowledged in recent quarterly reports.

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Global Problems Hit Home

"Location, location, location" are the three key words in real estate, but the Petroleum Refining Industry has been using another mantra in recent months: "Capacity, capacity, capacity." A long (and growing) list of geopolitical crises has taken more than 5 million barrels per day (bpd) of refining capacity offline worldwide, with executives from PBF Energy Incorporated and Valero Energy Corporation sounding the alarm last week in quarterly earnings-related conference calls. Industrial Info Resources is tracking more than $1.8 billion worth of active and proposed projects from PBF and Valero.

Two ongoing wars have imposed serious constraints on the production and transportation of refined products worldwide: Iran's decision to close the Strait of Hormuz amid its ongoing conflict with the U.S. and Israel has disrupted both crude and refined product exports from the Middle East, while Ukraine's drone attacks on Russian refineries accounts for as much as 2 million of the 5 million bpd offline globally, according to Gary Simmons, the chief operating officer of Valero, in his company's recent earnings call.

According to Industrial Info Resources data, refineries in Russia are experiencing more than 3.5 million bpd of unplanned outages, while the Middle East conflict had taken more than 2.7 million bpd of unplanned crude and condensate capacity offline at the end of July.

Industrial Info Resources offers more information in its Global Market Intelligence (GMI) Offline Event Database, where readers can find detailed lists of outages in Russia and outages across the Middle East.

But the U.S. is facing its own problems, with the recent closures of refineries across California forcing much of the West Coast to rely on more expensive imports, according to Matthew Lucey, the chief executive officer of PBF Energy, who discussed the matter in last week's earnings call: "U.S. and West Coast markets are finding it harder to pull the imports they have historically relied on. The West Coast and East Coast are structurally short refining capacity and depend on imports, often from less stable sources to balance."

Strict state-level environmental mandates and rising operational costs forced Valero to close its refineries in Benicia, California, in April. The move followed Phillips 66's closure of its refineries in Los Angeles roughly one year earlier.

All of these trends, along with unplanned recent outages at some major facilities, led Darren Woods, the chief executive officer of Exxon Mobil Corporation, to warn U.S. consumers that gasoline prices will not be coming down anytime soon.

"Pump prices are being established by the supply and demand of refined petroleum products, not crude," he said in a recent interview with CNBC's Squawk Box. "We're going to have to get capacity restored and back into the marketplace, either by opening the strait and getting product flowing through there, or by China bringing additional exports into the marketplace."

By the Numbers

• More than $1.8 billion: Total investment value of active and proposed projects from PBF and Valero
• More than 6 million bpd: Estimated refining capacity offline worldwide, due to conflicts in Ukraine and the Middle East, according to Industrial Info
• 70%: Share of capital spending at PBF or Valero refineries attributed to revamps or upgrades to existing units

Uphill Battle for New Capacity

None of this is to say that PBF or Valero announced plans to add new refining capacity, as greenfield projects face significant regulatory and investment hurdles in even the most advantageous of market environments. However, both companies are planning revamps, upgrades and optimization projects to improve performance at their refineries, in addition to their regular maintenance programs.

According to Industrial Info Resources data, 70% of the active or proposed capital-spending projects at PBF or Valero refineries are attributed to revamps or upgrades to existing units.

Valero, for instance, is preparing to begin rebuilds on two 'Gulfiner' units at its refinery in Port Arthur, Texas, that were damaged in a March 23 explosion and resulting fire, which seriously damaged a diesel hydrotreater (DHT) unit and the control room for multiple hydrotreating units.

"Repairs to the Port Arthur DHT unit are expected to be completed and the unit returned to service by year-end," said Harminder Bhullar, the chief financial officer for Valero, in the earnings call. "Total repair costs are estimated to be $250 million and are included in our updated guidance for sustaining CapEx [capital expenditures]. We expect a substantial portion of the cost to be covered by insurance. In the meantime, the refinery continues to operate at normal throughput rates."

Industrial Info Resources offers more information on Valero's Port Arthur Refinery projects in its GMI Petroleum Refining Plant and Project databases, where readers can find details--including construction schedules, investment values and necessary equipment--in a plant profile and detailed project reports on the rebuilds of Gulfiner 241 and Gulfiner 243.

IIR Energy covered the explosion at Port Arthur in its March 24, 2026, Breaking Energy News (BEN) article - Valero's Port Arthur Refinery Remains Operational After Fire Shuts Down Diesel Unit.

Making the Best of a Rough Market

Refiners are finding it too costly even to reopen idled units at otherwise operational refineries. Michael Bukowski, the senior vice president and head of refining for PBF, acknowledged during the earnings call that "there are no short-term plans to bring back any units" at the company's refinery in Paulsboro, New Jersey. "And in terms of the rest of the industry, it really depends on how well [any presently idled] units were put away or put up, and the costs associated with bringing it back."

Paulsboro is home to three units that were idled in recent years. Readers can learn more from a detailed plant profile.

Nonetheless, PBF is finding ways to improve operations, even amid unexpected setbacks. The company performed unplanned work on a fluid catalytic cracker unit (FCCU) at its Toledo Refinery in Oregon, Ohio, during the second quarter, which temporarily reduced throughput on the 79,000-bpd unit. But it gave the company an opportunity to perform key maintenance, which allowed it to push a turnaround planned for the fourth quarter to the first half of 2027, when the company expects to perform a major upgrade that will replace outmoded equipment.

PBF also is planning to begin work in the coming weeks on a upgrades to a distillate hydrocracker unit at its refinery in Martinez, California, which it expects to complete in the fourth quarter. Readers can learn more from detailed reports on the FCCU and distillate hydrocracker projects, and detailed profiles of the Toledo and Martinez refineries.

Big Boosts to the Bottom Lines

The decision to push back the Toledo Refinery's planned turnaround was among the factors that caused PBF to reduce its total capex guidance for 2026 by about $75 million to $850 million. Maintenance also was a major factor in Valero's outlook, with Bhullar estimating full-year capex would total about $2 billion, with "$1.7 billion is allocated to sustaining the business."

PBF's second-quarter net income was reported to be $912.9 million, compared with a loss of $5.3 million in second-quarter 2025, which the company attributed, in part, to a massive February 2025 fire at its refinery in Martinez, California.

Valero reported net income of $3.7 billion, compared with $714 million in second-quarter 2025. Revenues stood at $44.5 billion, compared with $29.9 billion in the same period last year.

The Industrial Info Resources GMI Project and Plant databases offer a full list of detailed reports for projects mentioned in this article, and a full list of related plant profiles.

Industrial Info Resources also offers a full list of reports for active and proposed projects from PBF and Valero.

Key Takeaways

• Global conflicts and domestic policies have imposed serious constraints on the U.S. Petroleum Refining Industry.
• Neither PBF nor Valero have announced plans to add new refining capacity.
• Refiners are finding it too costly even to reopen idled units at otherwise operational refineries.

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About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news, and analysis on the industrial process, manufacturing, and energy-related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified, and verified plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 trillion (USD).