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Will Refinery Fire Cause Gas Prices To Soar In California?

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Gasoline prices in California, August 2012 [photo: Brenda Priddy]

Gasoline prices in California, August 2012 [photo: Brenda Priddy]

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A fire yesterday evening in a refinery critical to providing special California gasoline blends may boost gas prices in the state substantially.

The blaze, first observed around 6:15 pm and brought under control five hours later, occurred in the Richmond refinery owned by Chevron [NYSE:CVX].

The fire was finally extinguished in the early hours of the morning, according to NBC and other sources.

That facility, located on the east side of San Francisco Bay, provides one-eighth of all the gasoline used in the state.

It was first opened in 1902, making the 110-year-old facility irreplaceable in a state that hasn't seen a new refinery open in decades.

To reduce emissions and improve air quality, California mandates different blends of gasoline--including a "summer blend" and a "winter blend"--than other areas of the country.

That makes it far more challenging to find alternative supply sources if in-state gasoline production is affected by a sudden event such as this one.

The extent of the damage is unclear, although local television station KGO reported that all production at the refinery had been halted--as is common in such events.

Analysts are already bracing for price spikes as a result of the shutdown.

Posted prices rose overnight as much as 24 cents a gallon in Los Angeles, according to reports this morning.

If damage can be fixed in a matter of days or a week or two, the impact on California gas prices may not last long.

But if damage is more severe, a shutdown could last weeks or even months, severely reducing the supply of California-only gasoline.

Unconfirmed reports say the shutdown may be as long as three months.

Previous fires have occurred at the refinery in 2007 and last November.

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Comments (6)
  1. Maybe the Napa Valley can find a suitable liquid for the cars.
     
    Post Reply
    -1
    Bad stuff?

     
  2. What? at $20/L , nobody can afford it.

    BTW, they can't grow any more grapes in Napa/Sonoma. They are out of water...

    Personally, I prefer wines out fo Sonoma County instead of Napa County...
     
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    Bad stuff?

  3. Of course those of us with EV vehicles are also immune to this kind of problem as well.

    8 - )

    Further local news reports recommendations to "turn off air conditioning, close up one's house, stay inside, etc." as the fire is leaving airborne pollution highly dangerous to breathing.

    Gasoline addiction is such a wonderful and rewarding experience.
     
    Post Reply
    +1
    Bad stuff?

  4. West coast states (CA, OR, WA) petro prices just returned to national levels in July after the BP Cherry Point came back online in late June. The Cherry Point oil refinery near Ferndale, WA suffered pipe failure and fire that left crude processing shutdown from mid-Feb till late June. Expect prices to be 10-15% above national averages.

    http://seattletimes.nwsource.com/html/localnews/2018472672_apwabpfire.html
     
    Post Reply
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    Bad stuff?

  5. Lot of refinery 'accidents' lately. Hmm. $$$
     
    Post Reply
    +1
    Bad stuff?

  6. It is actually a good thing in a bad way... If West Coast gas go up to $5/gallon, more hybrids and EVs will be sold here... People will be willing to take a dive into the EV pool...
    The best thing that can happen to EV community is we have a gas shortage for few months...
     
    Post Reply
    Vote
    Bad stuff?

 

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