What Refinery Fire Means for San Diego's Gas Prices

Refinery fire will impact oil market, but supply to southern California may stay the same, state spokesperson says

By Lauren Steussy
|  Wednesday, Aug 8, 2012  |  Updated 12:59 PM PDT
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What Refinery Fire Means for Gas Prices

Consumer Bob Hansen

Monday’s massive fire at the Chevron refinery in Richmond is expected to have costly impacts at San Diego's gas stations.

But the prices here will have little to do with the fire itself.

Experts predict prices at the pump will rise over 30 cents per gallon in California, especially now that the refinery was shut down. On Wednesday, the average in San Diego rose two cents to $3.99/gallon. It will likely hit $4/gallon by Monday, said Charles Langley with the consumer advocacy group UCAN.

The prediction of another “super spike” in gas prices could send San Diego motorists racing to the pumps.

Not so fast, one state official warned.

California Energy Commission spokesman Rob Schlichting said motorists should do the opposite, if at all possible. Concern over oil supplies after the fire could trigger an expensive market overreaction.

Analysts agree, and say there is usually a spike in prices every time a refinery catches fire. In February, BP’s Washington refinery caught fire, sending prices in the Pacific Northwest and all along California skyrocketing, said Patrick DeHaan of GasBuddy.com.

“This is all a bit overblown,” DeHaan said. “The market always tends to panic.”

Much like stocks, the only factor that drove up prices Tuesday was a skittish market. But the oil supply in Southern California will probably stay the same, Schlichting said.

“Fuel supplies for gasoline and diesel are adequate and right now there seems to be no supply problems,” he said Wednesday.

Oil in San Diego is supplied mainly by the six Southern California refineries, all located in the Los Angeles area. But with the Richmond refinery now offline, 15 percent of California’s gasoline is now cut off, according to the Oil Price Information Service.

Schlichting insisted that since none of San Diego’s oil comes from Northern California refineries, gasoline supplies in San Diego won’t be impacted by the fire.

Also, there are no pipelines from Los Angeles refineries to Bay Area refineries. Transporting any oil north would require barges or trucks, which is much more expensive, Langley said.

Langley agreed that San Diego’s gasoline supply won’t be as impacted as the Bay Area’s – Oregon and Washington refineries will likely absorb the depletion caused by the Richmond fire, he said.

On the other hand, San Diego will undoubtedly feel the impact of the market reaction.

“When Chevron refinery sneezes, all of the west coast gets a cold,” Langley said.

Prices in San Diego could rise up to 40 cents, regardless of whether one drop of oil in Southern California makes it to the Bay Area, Langley predicted.

“The reality is that this is the third biggest refinery in the state,” he said. “Some people doubt that it will even come back online. And if that happens, we’re definitely looking at a spike of 40 cents a gallon. We’ll still probably see 20 or 30-cents spike. I just don’t see any way around it.”
 

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