California's gas prices may rise due to Chevron refinery fire

The Sacramento BeeAugust 8, 2012 

California drivers will soon feel the heat from the fire Monday evening in the sprawling Chevron refinery in Richmond.

Energy analysts expect gas prices to surge to $4 a gallon or more in the weeks leading up to the Labor Day holiday weekend.

GasBuddy.com, which tracks gas prices in Sacramento and other cities, warned that gas costs in California – which were already rising – are likely to spike between 10 and 25 cents this week alone.

"Spot (wholesale) prices have already increased by as much as 30 cents per gallon in some West Coast markets, and that's before the refinery damage has been fully assessed," said Patrick DeHaan, senior petroleum analyst for GasBuddy.

"While wholesale increases do not always translate directly into retail increases of the same amount, they certainly point to the direction for which consumers should be prepared."

Even before the fire, California prices were affected by the shutdown of the Valero Benicia facility in July for maintenance. On Monday, SactoGasPrices said the average price of gas in the Sacramento area rose 5.8 cents over the previous week to $3.73 a gallon.

The full extent – and expected duration – of refinery disruption was still unclear late Tuesday. Chevron officials said some portions of the Richmond facility were still operating, but they confirmed that the unit where the fire began was completely shut down.

GasBuddy said the closure probably will affect the entire West Coast, with projected price hikes of 10 cents to 15 cents this week in both Oregon and Washington.

The Chevron refinery is one of the largest on the West Coast, with an oil-processing capacity of more than 240,000 barrels per day. It has a history of fires and has been a focal point of complaints by nearby residents and environmentalists.

Fire crews extinguished flames on Tuesday, but plumes of black smoke sent scores of people to Bay Area hospitals Monday night. Doctors Medical Center in San Pablo treated 181 for eye and breathing problems. Kaiser's Richmond Medical Center treated another 200.

Several refinery workers sustained relatively minor injuries. No serious injuries were reported.

The problem started at 4:30 p.m. Monday after a small leak was discovered in the refinery's No. 4 Crude Unit, according to Chevron spokesman Sean Comey. Workers attempted to close the leak, but it became larger, which eventually led to an ignition.

By 6:30 p.m., black columns of smoke were rising into the air, and Contra Costa County health officials issued a shelter order for surrounding cities.

Bay Area Air Quality District spokesman Ralph Borrmann called conditions "safe" for area residents by Tuesday morning, with the shelter order lifted.

"The weather conditions last night and today are favorable for containing the smoke," Borrmann said. "Stronger winds were able to disperse the particles."

Comey said air quality tests conducted by Chevron and Contra Costa health officials indicated that air quality was safe for the public.

The 110-year-old oil refinery is no stranger to fires, which occurred in 1999 and again in 2007.

"Most of these fires tend to be different once you determine the root cause," Comey said. "Right now, we're focused on addressing the impact to the community and investigating what happened."

On Tuesday, Chevron issued an official apology to the community and said it would pay any medical and property expenses stemming from the fire. "Nothing is more important than safe operations and yesterday we did not meet that expectation," the company said in a statement.

Environmentalists and community activists were quick to voice their concerns.

"These explosions and the massive toxic cloud hanging over their community and homes are only a part of the pattern of operation at Chevron's Richmond facility, and Chevron should be held to account," said Leslie Fields, Sierra Club director for environmental justice, in a statement.

Michael Parker, a community leader and Richmond resident, said many residents near the refinery don't know what chemicals they're breathing, because Chevron treats the information as proprietary.

As for Monday, he said, "Many people weren't notified about the emergency until they saw the plume of smoke."

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