State’s Gas Prices Are Rising After Explosion at Refinery

Gasoline prices in the state are on the way up primarily because of an explosion last week at a Tosco oil refinery in Northern California that killed four workers.

Tosco Corp. agreed Tuesday to temporarily shut down the 156,000-barrel-a-day refinery in Martinez at the request of the Contra Costa County Board of Supervisors, which had threatened legal action against the Stamford, Conn.-based company. The refinery will remain closed during a safety review, which will last at least a month.

The price of gasoline in the state has been edging higher in recent weeks and is expected to rise more because of the closure of the large refinery. California’s gasoline market is vulnerable to price swings because very few refineries produce the state’s expensive, cleaner-burning fuel.

The average price of regular unleaded gasoline in California is $1.118 per gallon, the California Energy Commission reported Tuesday. That’s up from $1.099 per gallon two weeks ago, before the Feb. 23 accident. A year ago, regular unleaded gas cost $1.098 per gallon.

Nationwide, the average price of regular gasoline rose last week to 91.3 cents a gallon, up 0.6 cent from the week before but about 13 cents below year-ago levels.

The Martinez refinery accounts for slightly less than 10% of the state’s oil refining capacity and produces about 4 million to 5 million gallons of gasoline a day. Tosco said it will continue to pay the refinery’s 700 workers during the closure, which could cost the company $1 million a day.

The spot price of gasoline had risen only 2 to 3 cents in the last week and retail prices have remained fairly stable because Tosco had stockpiled gasoline and could continue to supply the market, said Claudia Chandler, assistant executive director of the California Energy Commission.

Prices may not rise sharply, Chandler said, because some of the gasoline produced by the Tosco Martinez refinery is sent outside of California.

The average price of gasoline rose about 10 cents a gallon after a brief power outage knocked out three Los Angeles refineries for a few days in April. It took several weeks for the price to fall.

“Exactly what will happen with gasoline prices, no one really knows,” said Harry Johnson, pricing manager for Arco Products. He noted that spot prices jumped a few more cents Tuesday with the news of the shutdown.

“This will put upward pressure in terms of supply,” Johnson said. “In gasoline markets, there’s not a lot of difference between adequate supply, surplus and fear of having a shortage. It doesn’t take much to change people’s perspective.”