Friday, August 10, 2012

Higher gas prices expected after refinery fire

A man pumps gas at a Chevron gas station in San Francisco, Tuesday, Aug. 7, 2012. A major fire at one of the country's biggest oil refineries? will help trigger a rise in oil and gas prices in California and elsewhere on the West Coast, analysts say. The fire, which sent plumes of black smoke over the San Francisco Bay area and scores of people to hospitals with breathing problems, erupted Monday evening in the massive Chevron refinery in this city about 10 miles northeast of San Francisco. Pump prices in California and elsewhere on the West Coast will head up, and will soon average more than $4 per gallon, says Tom Kloza, chief oil analyst at Oil Price Information Service. (AP Photo/Jeff Chiu)

A man pumps gas at a Chevron gas station in San Francisco, Tuesday, Aug. 7, 2012. A major fire at one of the country's biggest oil refineries? will help trigger a rise in oil and gas prices in California and elsewhere on the West Coast, analysts say. The fire, which sent plumes of black smoke over the San Francisco Bay area and scores of people to hospitals with breathing problems, erupted Monday evening in the massive Chevron refinery in this city about 10 miles northeast of San Francisco. Pump prices in California and elsewhere on the West Coast will head up, and will soon average more than $4 per gallon, says Tom Kloza, chief oil analyst at Oil Price Information Service. (AP Photo/Jeff Chiu)

Area residents line up outside the injury attorney offices of R. Nicholas Haney in Richmond, Calif., on Tuesday, Aug. 7, 2012, to pick up a claim form in response to the Chevron refinery fire that impacted the community. Investigators are waiting for access to the charred crude oil unit of a Chevron refinery where a fire sent a towering plume of black smoke into San Francisco Bay area skies and pushed gas prices higher along the West Coast. Hundreds of people went to hospitals with respiratory issues during the fire at the Richmond refinery that produces 16 percent of the region's daily gasoline supply. (AP Photo/Bay Area News Group, Laura A. Oda) MANDATORY CREDIT

Area residents line up outside the offices of injury attorney R. Nicholas Haney in Richmond, Calif., on Tuesday, Aug. 7, 2012, to pick up a claim form in response to the Chevron refinery fire that impacted the community. Investigators are waiting for access to the charred crude oil unit of a Chevron refinery where a fire sent a towering plume of black smoke into San Francisco Bay area skies and pushed gas prices higher along the West Coast. Hundreds of people went to hospitals with respiratory issues during the fire at the Richmond refinery that produces 16 percent of the region's daily gasoline supply. (AP Photo/Bay Area News Group, Laura A. Oda) MANDATORY CREDIT

Members of the Richmond group Urban Tilth stage a protest before the Chevron town hall meeting at the Richmond Memorial Auditorium in Richmond, Calif., on Tuesday, Aug. 7, 2012. in Richmond, Calif., on Tuesday, Aug. 7, 2012, to pick up a claim form in response to the Chevron refinery fire that impacted the community. Investigators are waiting for access to the charred crude oil unit of a Chevron refinery where a fire sent a towering plume of black smoke into San Francisco Bay area skies and pushed gas prices higher along the West Coast. Hundreds of people went to hospitals with respiratory issues during the fire at the Richmond refinery that produces 16 percent of the region's daily gasoline supply. (AP Photo/Bay Area News Group, Jane Tyska) MANDATORY CREDIT

Area residents line up outside the Injury Attorney offices of R. Nicholas Haney in Richmond, Calif., on Tuesday, Aug. 7, 2012, to pick up a claim form in response to the Chevron refinery fire that impacted the community. Investigators are waiting for access to the charred crude oil unit of a Chevron refinery where a fire sent a towering plume of black smoke into San Francisco Bay area skies and pushed gas prices higher along the West Coast. Hundreds of people went to hospitals with respiratory issues during the fire at the Richmond refinery that produces 16 percent of the region's daily gasoline supply. (AP Photo/Bay Area News Group, Laura A. Oda) MANDATORY CREDIT

(AP) ? Analysts expect West Coast gas prices to rise beyond $4 a gallon after a fire knocked out a key section of one of the nation's largest oil refineries.

Meanwhile, the same U.S. Chemical Safety Board team that investigated the oil spill in the Gulf Of Mexico was standing by with state and company inspectors waiting for structural and environmental tests to see if it was safe to enter the unit.

In all, five separate investigations will be done to determine the cause and effects of the Monday night blaze at Chevron's Richmond refinery.

"This is an important accident in its own right, it was a large fire and has the potential to affect fuel supplies and prices," said Dr. Daniel Horowitz, a member of the chemical board.

The average price of regular gasoline jumped in California from $3.86 a gallon on Tuesday to $3.94 on Thursday, according to the website GasBuddy.com.

Some experts expect the disruption in production to last for weeks and push prices beyond $4 a gallon.

"It'll depend on Chevron getting their facility repaired," said Patrick DeHaan of GasBuddy.com.

The Richmond refinery produces 16 percent of the region's daily gasoline supply. The fire knocked out a unit that makes a specialized blend of cleaner burning gasoline that satisfies air quality laws in California, Oregon and Washington.

Sean Comey, a spokesman for Chevron, said myriad factors were pushing gas prices higher, not just the loss of one unit at the refinery.

"There are a variety of economic conditions like rising crude and ethanol costs, which also affect what consumers pay at the pump," he said.

Comey said the refinery continues to produce gasoline, diesel and jet fuel but in reduced amounts.

Experts said inventories of the cleaner burning gas already were low. With the refinery's output in question for what could be weeks, analysts say prices could reach $4 a gallon as soon as Friday.

"California has the cleanest-burning gas in the nation, so this is definitely a market disruption," said Rayola Dougher, a senior economic adviser with the American Petroleum Institute.

California can't easily replace those supplies with imports from Washington state, Asia and the Gulf Coast, so it's more difficult to ease the impact of the lost production, Dougher said.

Some analysts believe other refineries in California could make up for the shortfall, if Chevron's capacity remains limited by the fire.

Tradition Energy analyst Addison Armstrong said California refineries have been producing about 6 million barrels a week, down from 7 million a week last month.

"That should be enough capacity to make up for the loss of output from Richmond," he said.

Comey said Chevron could not estimate when the damaged unit would be back in production. The company also said it did not know when investigators would have access to the site.

Horowitz said investigators will also be evaluating Chevron's emergency response system and other concerns raised by the community.

Hundreds of people contacted attorneys and were expected to file claims against Chevron for breathing problems and other health issues stemming from the thick black smoke that spewed from the facility during the fire.

The company has set up a compensation fund and distributed phone numbers that can be used to file claims. The initial phone lines were overwhelmed by callers, and the company said it was arranging help to meet the demand.

___

AP business writer Sandy Shore contributed to this report from Denver.

Associated Press

Source: http://hosted2.ap.org/APDEFAULT/f70471f764144b2fab526d39972d37b3/Article_2012-08-10-Refinery-Fire/id-3ff9ada1125b4bf8bf1bebda2806255d

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