Southland motorists should expect to see gasoline hikes of 10 to 20 cents per gallon next week because of refinery problems and other issues, an industry analyst said Friday.
Allison Mac, a petroleum analyst with GasBuddy.com, said Chevron’s Richmond refinery implemented an unplanned shutdown on Tuesday for flaring. That’s when too much pressure builds up due to overpressurizing of equipment and flammable gas is released through pressure-relief valves.
“An equipment outage caused an unplanned shutdown of the fluid catalytic cracking unit, which plays an important role in refining oil to gasoline,” Mac said. “They are back online and back to full capacity.”
That was the same problem that occurred at ExxonMobil’s Torrance refinery in mid-February. That equipment failure ultimately caused an explosion that injured four people.
Mac said the ExxonMobil facility is still not producing gasoline and probably won’t be fully up to speed until June or July.
Tesoro’s Golden Eagle refinery in Martinez also briefly shut down a processing unit Wednesday, according to Mac.
That refinery was in the midst of converting to California’s summer blend of gas in early February when steelworkers at the facility joined in a nationwide strike. The company decided the safest option at that time was a complete shutdown. It has since reopened.
Danielle Sarp, 62, of Pasadena wasn’t happy to learn that prices will be going up again.
“That’s ridiculous,” she said. “I just think the government wants to raise prices. They know we need the gas and they know we’re gonna pay for it. It seems like everything is going up but our wages.”
Critics might question whether California’s refinery problems are calculated on the part of oil companies — or at least exaggerated — as a means for raking in deeper profits.
Tom Kloza, global head of energy analysis for the Oil Price Information Service, said that’s not the case. But he did highlight an issue few consumers know about.
“California is kind of ground zero for an issue that seems to get lost, and that’s the just-in-time inventory system,” he said. “Sometimes that can be ‘just intolerable.’ ”
When two or three refineries have problems, prices typically shoot up like a rocket and return to earth like a feather, Kloza said.
“The other thing to remember is that there are European refiners that can make California’s blend of gas but you can’t get it here in two week’s time like you can on the East Coast,” he said.
Mac agreed.
“It’s just very tight,” she said. “We’re always one flare-up or one glitch short of seeing a price hike. The margin of error here in California is very small — like Jennifer Lopez’s Academy Awards dress.”
The state’s inventories are in good shape, Mac said. But any interruption in gasoline production — no matter how brief —can rapidly boost prices at the pump.
Mac also noted that wholesale gas prices have matched this year’s high point that was seen at the beginning of March. Gasoline imports have also slowed, she said, reducing regional inventories.
For the week ending April 17, California refineries had more than 5 million barrels of the state’s specially formulated summer blend of gas in stock. That was down 1.8 percent from the previous week and down 7.2 percent from a year ago, according to figures from the California Energy Commission. Refinery production for the week ending April 17 was down 4 percent.
On Friday the average price for a gallon of regular in the Los Angeles-Long Beach area was $3.32 a gallon. That was up 6 cents from the previous day, up 15 cents from a week earlier and up a penny from a month ago, according to AAA’s Daily Fuel Gauge Report.
None of those price hikes is welcome. But a broader perspective reveals that Friday’s price was down nearly a dollar from $4.30 a year ago.
The Inland Empire has seen similar price hikes. On Friday the average price there was $3.26 a gallon, up from $3.13 a week ago. But it fell 2 cents below the month-ago price of $3.28 and was well below $4.27 a year earlier.
