Gasoline jumps 23 cents; Tesoro to be state’s biggest refiner


It’s a big week for energy news in California.

The state’s average for a gallon of regular gasoline jumped 23 cents over the past week to $4.083, leapfrogging a handful of Midwest states to regain its all too common rank as the nation’s second most expensive place for motor fuel.

The biggest influence was last week’s fire at Chevron Corp.’s Richmond refinery in Northern California, which is the state’s third biggest and an important source of fuel for Southern California.

At full capacity, the Richmond refinery can produce 243,000 barrels of fuel a day.


The parts of the refinery that were unaffected by the fire are operating, but Chevron has not disclosed how much gasoline and diesel fuel it is currently able to make.

Fuel pricing analyst Bob van der Valk said that Chevron will probably have to buy fuel to maintain its commitments.

Patrick DeHaan, a senior petroleum analyst for, said that the California refinery fire combined with other refinery and pipeline problems in the Midwest to kick the national average for a gallon of regular gasoline up 7.7 cents to $3.696 over the past week.

The biggest development in that story came from the Washington-based U.S. Chemical Safety Board (CSB), which is one of several agencies looking into the cause of the blaze.

Chemical Safety Board Chairman Dr. Rafael Moure-Eraso noted over the weekend that the fire could have been tragically fatal for several Chevron employees if they hadn’t managed to escape the vapor cloud that engulfed them moments before it burst into flame.

“Monday’s fire was a near-disaster for refinery personnel. The circumstances warrant a full and independent federal investigation to determine the root causes,” Moure-Eraso said.

“Although fortunately no workers were killed, the overall impact of the incident ranks it as among the most serious U.S. refinery incidents in recent years,” Moure-Eraso added.

During any other week this year, the biggest energy news in California would have probably been the long-awaited announcement of a buyer for BP’s 266,000-barrel-a-day refinery in Carson, which is the state’s largest such facility.

First, the deal will make San Antonio-based Tesoro Corp. California’s biggest and most important refiner of motor fuels. Tesoro already owns the state’s fourth-largest refinery, the 166,000-barrel-a-day Golden Eagle (Avon/Rodeo) facility and a 97,000-barrel-a-day refinery in Wilmington.

The BP deal will push it ahead of Chevron, which has two refineries that produce about 503,000 barrels a day. Tesoro will have 528,000 barrels a day of capacity.

The refinery purchase price is about $1.18 billion, but the deal includes much more, according to Fadel Gheit, senior energy analyst for Oppenheimer and Co. Tesoro will be acquiring “800 dealer-operated retail sites (service stations) in Southern California, Nevada and Arizona, as well as the ARCO brand and a master franchisee license for the ‘ampm’ convenience store brand,” Gheit said.

The total deal is valued at $2.5 billion.

Also included in the deal: three marine terminals, four land-based storage terminals, more than 100 miles of pipeline with access to LAX airport, and four product marketing terminals.

Gheit said it was a bold move for Tesoro, but added that the BP-Tesoro deal faces significant regulatory hurdles.

Objections are sure to be raised over the deal creating an even greater consolidation of control over California’s refining capacity. The deal will mean that the state’s four most important refineries will be in the hands of just two companies--Tesoro and Chevron--instead of three.


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