California motorists may see gasoline prices rise modestly as a result of the fire that erupted at the Marathon Petroleum refinery in Carson on Tuesday night.
Within a week or two, prices at the pump could inch up by 10 to 15 cents per gallon, said Patrick DeHaan, head of petroleum analysis at Gas Buddy, a company that tracks real-time gas prices. California has already seen an initial effect, with wholesale prices in Los Angeles and San Francisco up about 7 and 12 cents, respectively, on Wednesday morning.
The Marathon refinery is the largest on the West Coast, able to process 350,000 barrels a day. It’s one of the refineries that produces the gasoline blend required by the California Air Resources Board to reduce pollution.
The fire was extinguished Wednesday morning. A portion of the refinery was shut down in response to the fire, Marathon said in a statement. It did not provide details on the extent of the damage.
The rise in prices due to the fire may be offset by fears of the coronavirus and a resulting worldwide drop in demand, which is driving global oil prices down significantly.
“It should not be a dramatic overnight spike,” DeHaan said of any price increase. “The silver lining is it’s happening at a time of year where demand is reduced and oil prices remain relatively low. The market may be reacting less than if it had happened out of the blue in the middle of summer,” which is the season with peak demand.
Denton Cinquegrana, chief oil analyst at Oil Price Information Service, said it might be too early to tell how the fire will affect gas prices. If the refinery is shut down for just a short time or the company is able to keep operating despite some damage, prices should not be affected much.
“We saw an initial jump in prices, but it’s already started to cool a little. ... Markets change, markets react, there’s a case to be made that the uptick in retail prices might be a bit more modest than anticipated,” he said. “The big question is, how long before they can get it back up and running?”