Chevron refinery fire to cause jump in gas prices

(KGO)
August 7, 2012 6:15:31 PM PDT
Drivers across the state will likely be facing sticker shock with a key portion of the Chevron's Richmond refinery offline for an unknown period.

California drivers consume 1 million gallons of gasoline a day and they'll be seeing some dramatic price increases at the pump by as much as 25 cents a gallon over the next few days because of what has happened in Richmond. Some experts are even saying it could be as high as 50 cents per gallon, all because of competitive pricing. It all depends on how long the refinery in Richmond is offline.

"Already today, we have seen the spot price of gasoline at the wholesale level go up about 25 cents a gallon. If that holds, then we're going to see that come through to the pump pretty quickly," Severin Borenstein at the UC Energy Institute at Haas told ABC7 News.

The wholesale markets are concerned about how long it will take Chevron to repair and re-open the number four crude unit at the heart of the refining process. Chevron's Richmond refinery produces about 15 percent of the gasoline supply in California, but at a briefing early Tuesday, Chevron was not willing to project how long production will be reduced. "I understand what people are thinking, but I'm afraid I cannot speculate at this time. What I will say is that we will only start this facility back up when it is fully safe to do so," Chevron spokeswoman Heather Kulp said.

With oil experts projecting that pump prices will rise 20 to 25 cents per gallon in a matter of days, consumers are facing a price shock at the pump. Gas prices will hit $4 or higher. They've already gone up 14 cents in the past week. California uses a special gas formulation to meet clean air standards, produced by a limited number of refineries. Other facilities could begin making the California blend, but not overnight. And, shipping it to California would add to the cost.

"There are alternate supplies. We can bring in gasoline from elsewhere in the country and elsewhere in the world. The problem is that it takes a few weeks to get them here," Borenstein said. "That's why every time we see an outage in California or on the West Coast, we have a price shock for at least a few weeks."

Price pressure may also hit the airlines as well as the trucking industry although Bay Area airports say they have large storage tanks for their jet fuel. Southwest Airlines says they will be OK. San Francisco International Airport says they buy their fuel from Shell.

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