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Fire hits California refinery; local gasoline prices could rise

By Erwin Seba

(Reuters) - An explosion and fire at an oil refinery in Torrance, California, on Saturday forced the partial shutdown of the plant, leading oil traders to expect a spike this week in West Coast gasoline prices.

Police and the plant owner said no one was hurt in the fire, which was extinguished by local firefighters.

Two years ago, a fire at the same plant led to its closure for several months and a sustained increase in West Coast gasoline prices for more than a year. After the fire on Saturday, a group of local residents worried about pollution and accidents protested at the refinery. The event had been planned to mark the anniversary of the Feb. 18, 2015 incident.

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Catherine Leys, one of the protesters, lives 1.4 miles from the plant and said industrial ash drifted down on the playground near her home after the 2015 blast.

The plant supplies 10 percent of California's gasoline. Traders said they expected local gasoline prices to jump this week.

“I expect prices will be firming on Tuesday, maybe 5 cents or 15 cents a gallon," a West Coast refined products trader said. He was talking about wholesale gasoline prices in the Los Angeles market. In California, pump prices normally follow wholesale price movements within hours.

PBF Energy owns and operates the refinery in the city of Torrance, just outside Los Angeles. PBF purchased it from Exxon Mobil Corp in 2016.

PBF shuttered the plant's crude distillation unit after the pre-dawn blaze, energy industry intelligence service Genscape reported.

The unit refines 155,000 barrels of oil per day, turning it into gasoline and diesel among other products.

PBF told state regulators it was forced to use its safety flare system on an emergency basis after the incident.

The crude distillation unit, which produces motor fuel, is the workhorse of the refinery. Within 24 hours of the Feb. 18, 2015 explosion, wholesale gasoline prices initially jumped 10 cents a gallon.

A RAND study found drivers ultimately paid an extra $2.4 billion for gasoline because of the 2015 Torrance refinery outage.

The Torrance refinery had at least two outages in 2016 after a power outage at a local utility knocked the facility offline. In October, PBF received a violation notice from the California's air regulator for excessive flaring following one of the outages.

California gasoline prices are frequently among the highest in the United States. Only Hawaii residents pay more.

California requires cleaner-burning fuel than most other U.S. states do. The state is geographically isolated with no pipeline connections to major refining centers on the Gulf Coast and Midwest, leaving the market tightly balanced between what West Coast refineries can produce and what can be shipped in.

(Reporting by Frank McGurty in New York and Patrick Rucker in Washington; Editing by Meredith Mazzilli and David Gregorio)

 
 
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