While Chevron cannot control the California market cost of gasoline, it can set the price of gasoline offered at Chevron stations. We are hoping that Chevron will commit to stabilize the cost of gasoline at local Chevron stations despite whatever spiking happens in the broader market.
Chevron officials are quoted below as saying that there will not be a shortage of gasoline in California, so any spiking would be simply a result of excessive profit taking by gasoline refiners and retailers. We are asking Chevron to make sure that local residents are not exposed to the double whammy of the refinery fire and higher gas prices.
Gasoline prices to spike in Bay Area following Richmond refinery fire
By George Avalos
Contra Costa Times
Posted:   08/07/2012 01:47:43 PM PDT
Updated:   08/07/2012 04:02:43 PM PDT

 

 
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Fire blazes at Chevron refinery in Richmond
Firefighting crews continue to pour water onto a unit after Monday's fire at the Chevron refinery on Tuesday, Aug. 7, 2012, in Richmond, Calif. (Aric Crabb/Staff)
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RICHMOND -- Gasoline spot prices spiked on Tuesday throughout California, an ominous harbinger of higher prices at the pump that could reach $4 a gallon by next week following the fire that hobbled Chevron's East Bay refinery.
Spot prices for gasoline -- the price set before its delivered to the pump -- jumped 34 cents in the Bay Area and 31 cents in the Los Angeles area, according to traders and other sources, including Tom Kloza, chief oil analyst at the Oil Price Information Service.
"With the spike in spot gasoline prices today, you are looking at average pump prices in the Bay Area ranging from $4 to $4.10 a gallon within a week or so," Kloza said. Bay Area prices at present are in the $3.70 range or a
Firefighting crews continue to pour water onto a unit after a fire at a Chevron refinery on Tuesday, Aug. 7, 2012 in Richmond, Calif. (Aric Crabb/Staff) ( ARIC CRABB )
bit higher.
The prospect for a sudden increase in California gasoline prices is partly due to the nature of the state's gasoline market. Strict environmental rules require a specific blend of gasoline to be sold in California. As a result, relatively few substitutes exist in other regions that could replace any reduction in gasoline inventories in California.
"It is a lot harder to substitute gasoline in California from other markets," said Scott Anderson chief economist with San Francisco-based Bank of the West. "That is why you get this sort of a quick response to changes of supply here. The supply of gasoline is inelastic."
The fire Monday at Chevron's refinery has caused one of the units at the plant to be shut down, he San Ramon-based energy giant said Tuesday.
"The number four crude unit was affected," said Brent Tippen, a spokesman for Chevron. "That unit is down."
The affected unit performs a distillation of crude oil as part of the refinery process.
"We are undertaking a full assessment of the refinery to see what can be started and when," said Lloyd Avram, a Chevron spokesman.
Any increase in prices could damage the statewide economy, which has struggled to extricate itself from the aftermath of the recession.
"Just at a time when California residents were counting on lower prices to add more disposable income, this refinery fire could put a dent in that," Anderson said. "These sorts of shocks that raise prices quickly hurt economic growth and consumer spending."
Chevron's Richmond refinery is the largest in the Bay Area. It can produce about 244,000 barrels a day. Chevron did not provide immediate information about the overall production status of the Richmond refinery,
Despite the production woes following the fire, Chevron officials said shortages of gasoline won't materialize in California.
"There is adequate supply of gasoline product in the California market to serve consumers' needs," Avram said.
Contact George Avalos at 925-977-8477. Follow him at twitter.com/george_avalos.