Californians need to brace themselves for gas price increases and motorists in Oregon and Washington should be on alert for gasoline prices that may push many California retail markets closer to $4 per gallon in weeks ahead.
Following the fire that began Monday and has closed the Chevron refinery fire in Richmond, Calif. Oregon and Washington will likely see increases, but to a lesser extent. The facility is the third largest refinery in California with oil processing capacity at 245,000 barrels per day.
In addition to the problems in Richmond, another refinery, the Valero Benicia (Calif.) facility was forced to close in July for maintenance issues. With capacity there at 132,000 barrels, the two refineries represent 377,000 barrels per day and it remains unknown when they will resume full production.
“Spot (wholesale/pre-tax gasoline) 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, GasBuddy.com. “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. This situation could be similar to that of the BP fire earlier this year that impacted Oregon, Washington, and to a lesser extent, California, except now the roles are slightly switched with the worst is likely to occur in California.”
Whether the California refineries resume operation in weeks or months remains to be determined. Unfortunately, because California has state-specific requirements for its gasoline, the California mandates exacerbate fuel supply problems when events such as these occur. Without legislative reforms, it cannot simply “borrow” fuel from neighboring states when CA refinery production is impeded.
Expected increase in gasoline prices in the next week:
California averages may rise 10-25c/gallon
Oregon averages may rise 5-15c/gallon
Washington averages may rise 5-15c/gallon