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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