Refinery Explosion Could Push Gas Prices Up - NBC Southern California

Refinery Explosion Could Push Gas Prices Up

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    NEWSLETTERS

    Industry analysts agree the explosion at the Torrance ExxonMobil Refinery has put upward pressure on gasoline prices--as much as 30 cents a gallon in the next wee. Patrick Healy reports for the NBC4 News at 5 p.m. on Feb. 19, 2015. (Published Thursday, Feb. 19, 2015)

    The upward trend of gasoline prices likely will be accelerated in California for at least the next week due to the damage sustained at a major refinery, industry analysts predict.

    Consensus is the price of a gallon of regular will rise another nickel or dime by this weekend, and possibly by another 25 cents next week.

    "It could be significant for the short term," said Jared Anderson, managing editor of the online report Breaking Energy.

    A portion of the refinery involved in pollution control, known as the fluid catalytic cracker, is shut down by order of Cal/OSHA, and cannot resume operation until proven to be safe, according to spokesman Peter Melton.

    Without that unit, it would be difficult if not impossible to produce gasoline without exceeding pollution standards, said Bob van der Valk, a veteran of the oil industry in California and currently senior editor of the Bakken Oil Business Journal,

    "No gasoline is being made there," said van der Valk. "For the moment they are not making anything — just steam and keeping it warm."

    ExxonMobil did not respond specifically to inquiries about current production, but in a statement said the refinery "continues to stabilize operations...The non-impacted units of the refinery continue to operate.  We are diligently working to ensure continued supply to our customers." 

    The Torrance refinery can produce up to 155,000 barrels of gasoline a day, about one-tenth of California's gasoline consumption.

    Dealing with Monday's problem was expected to take seven to 10 days, van der Valk said. "Then Wednesday the other shoe dropped."

    Since Tuesday, the spot market price for gasoline in the LA area has risen 22 cents, van der Valk said. He sees the pump price rising another 25-30 cents next week.

    At a Valero station across 190th Street from the refinery, a gallon of regular jumped six cents to $2.85 in the first day after the refinery explosion. But increases were not uniform. At a Mobil station just a few blocks away, regular remained at $2.79 a gallon.

    During the past year, the falling cost of crude oil had driven gasoline to the lowest levels since 2010, more than a dollar below pump prices early in 2014. But in January, prices began steadily edging up, to the point that even before the refinery was damaged, a gallon of regular cost 35 cents more than a month ago, according to the AAA Fuel Gauge report.

    Thursday morning, the average cost of a gallon in LA-Long Beach stood at $2.90.

    Another factor putting upward price pressure is the strike that has closed a Tesoro refinery in Martinez in Northern California since early this month. That has already been factored into the spot market price, said van der Valk.

    In Torrance, the investigation continues into the cause of Wednesday's explosion and fire, that injured four contract workers.

    Following safety inspections of the Torrance ExxonMobil refinery and subsequent investigation last year, Cal/OSHA issued 25 notices of violation, 17 categorized as "general," and eight as "serious," according to state records. The sum was more than the total of violations cited over the previous four years.

    A town-hall meeting to discuss the refinery situation will be held at 6 p.m. Friday in the Toyota Meeting Room of the Torrance Civic Center, according to Mayor Patrick Furey.