Valero Outage Could Affect Gasoline Prices
Just as the state’s gasoline prices showed their first declines in 12 weeks, a new refinery problem in Southern California emerged that could slow or stop the downward trend.
Valero Energy Corp. said Tuesday that it halted production at its Wilmington refinery over the weekend to address a vibration problem that will take six days to repair. The company said the move will prevent its usual production of 45,000 barrels of gasoline a day -- equal to about 4.5% of the state’s usual daily production.
With the state’s gas supply closely balanced between supply and demand, retail pump prices are especially volatile. Even small refinery disruptions can push up prices.
Valero’s troubles will cut into the limited supply of gasoline available for sale to unbranded gas stations and independent wholesalers, but it’s unclear whether the refinery outage is serious enough to derail the broader statewide trend toward lower consumer prices.
Most of the state’s gas stations won’t be affected by Valero’s outage because they get branded supplies from California’s other major refineries.
Even with small increases Monday and Wednesday on war-related worries, crude oil prices have fallen 28% from a 12-year high of $39.99, reached Feb. 27 in intra-day trading on the New York Mercantile Exchange. On Wednesday, the price of crude rose 66 cents to $28.63 a barrel.
The slide in crude prices already has cut costs for California’s gasoline wholesalers, who now pay more than 12 cents less per gallon for fuel compared with 10 days ago, according to figures from the California Energy Commission.
The latest survey of California retail prices shows that lower costs are beginning to be reflected at the pump. Figures from AAA’s daily survey showed that the average price in California remained flat at $2.174, while the nationwide average gas price fell eight-tenths of a penny to $1.679 on Wednesday,
A separate federal survey released Monday showed price reductions nationwide and in California, with a tiny increase in Los Angeles.
On Wednesday, the state energy commission delivered a dose of bad news with its weekly fuels report, which showed that overall gasoline production fell more than 12% in the week ended March 21, reversing two straight weeks of gains.
Energy commission spokesman Rob Schlichting attributed the decline to lower gasoline imports and troubles at BP’s refinery in Carson, but he added that prices should continue to fall.
A portion of BP’s Carson refinery was taken out of service for a major overhaul in January, but its return to service was delayed repeatedly by start-up glitches. The delay kept about 96,000 barrels a day of gasoline, or about 10% of the state’s normal daily output, off the market. The refinery unit resumed production a week ago and is operating normally, a BP spokeswoman said.
