Gas prices increase after Richmond refinery fire

After a fire rendered portions of the Chevron oil refinery in Richmond inoperable, gas prices have spiked in Berkeley and nearby areas.
Derek Remsburg/Senior Staff
After a fire rendered portions of the Chevron oil refinery in Richmond inoperable, gas prices have spiked in Berkeley and nearby areas.

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Gas prices in Berkeley have been on the rise since a fire at the Chevron oil refinery in Richmond rendered a portion of the facility inoperable.

The price spike that began the morning after the fire and continued through the following week has pushed prices to more than $4 per gallon, with some Berkeley gas stations reporting a wholesale price increase of as much as 50 cents per gallon.

According to Chevron Communications Specialist Melissa Ritchie, the fire is one factor among others — including the cost of crude oil — that has influenced the price of gasoline.

Chevron refineries provide about 20 percent of California’s gasoline and about 68 percent of jet fuel used by Bay Area and Sacramento airports, Ritchie said.

Denton Cinquegrana, an executive editor at Oil Price Information Service, estimated that the Richmond refinery might have to scale back to around 60 percent of its operational capacity.

But according to Alison apRoberts, an information officer at the California Energy Commission, the decrease in production at the Richmond refinery has been offset by an overall increase across the state. Data collected by the California Energy Commission shows that 461,000 gallons of crude oil were added to state refinery production between Aug. 3 and Aug. 10.

“We’re optimistic,” apRoberts said. “Refineries have increased their production, (so it) looks to us that there is reason to feel they can meet the increased demand.”

The Aug. 6 refinery fire prompted a temporary shelter-in-place order to be issued in Richmond, north Richmond and San Pablo. A federal investigation into the cause of the incident by the U.S. Chemical Safety and Hazard Investigation Board has begun, although officials said at a press conference on Tuesday that they had not yet been able to access the site due to personnel safety issues.

The Richmond refinery is one of the largest of 14 oil refineries in California that produce a particular blend of gasoline required under California state law. Prior to the fire, it refined 245,000 gallons of crude oil per day, according to data provided by the California Energy Commission.

Bridgeway Service and Touchless Car Wash — two independently owned Berkeley gas stations — are now selling their regular gasoline at $4.19 per gallon, which is even higher than the California state average of $4.10 reported by AAA’s price survey and the California Energy Commission.

[youtube http://www.youtube.com/watch?v=jetn0MxtAxE&w=560&h=315]

Mohamed Hammami, the store manager at Touchless Car Wash, said the price the station pays for a gallon of gasoline has jumped about 50 cents since the fire.

Steve Carvalho, owner of Bridgeway Service, reported a 28 cent per gallon increase from his supplier.

However, Cinquegrana predicted that at least the retail price of gasoline would likely stop rising.

“The worst of the price spike at the retail level is probably in the rearview mirror at the moment,” he said.

As for the refinery, Cinquegrana estimated about three months until it returns to its full capacity, gauging from similar fires that have occurred in the past.

Mary Jane Perna, an Albany resident who stopped at Touchless Car Wash to refuel on Tuesday, said she had noticed an increase in gas prices.

“I’m unemployed at the moment, so it makes me wince,” Perna said.

Carvalho, who recalled even larger spikes in recent years, sounded resigned to fluctuations in gas prices.

“I don’t even look anymore,” Carvalho said. “When they say it goes up, I say ‘fine.’ What am I going to do, close my doors?”

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  • gpw ’87

    Of course, that’s why they lit it silly.

  • B from FL

    In response to your article about the Chevron Fire in
    California that at least in part is due to deteriorating pipes and the
    possibility of resulting price increases at the pumps, why, as customers and consumers, do we allow businesses, like oil
    companies, to keep passing on to us the cost of their inability to manage their
    operations effectively? Whether it takes the form of worn out pipes, oil
    spills, the lack of planning for aging components in their systems, the lack of
    forward planning in general, etc., it
    amounts to gross mismanagement!

    I know that every company recovers capital expenditures made
    in the past through depreciation, in this case, the depreciation of the oil
    company’s distribution pipe line, so where is the money that should have been
    set aside for replacement of these pipes. What happened to the cash they
    received in the form of investment tax credits for the capital investments they
    made when they undertook these projects?

    Where is the
    “fiduciary responsibility” of big business in this country, not just oil
    companies, but almost every large company in every business segment?
    Unfortunately, they seem to have nothing to lose since they simply pass on the
    cost of their mismanagement to us, their customers, while still preserving or
    even increasing their own executive compensation as well as company profits!

    Before a company should be allowed to pass anything on to
    any customer, it should have to forgo any profits that year and the CEO and
    management should have to give up their bonuses; maybe then company executives
    would take their jobs a little more seriously.

    I was always expected from the first time I went to work to
    save a portion of my earnings for “future events” in my life and if things went
    beyond what I could handle financially, I was expected to take out a loan to
    manage those events, then to repay that
    loan without any possibility of “passing it on to someone else, especially a customer.”

    How is it then that
    whenever an oil company has a “deteriorating pipe issue” that resulted in an
    ensuing fire, or any other issue that smacks of mismanagement, that the cost at
    the pumps goes up, especially when prices are primarily related to speculation
    in the oil futures market?

    Haven’t these companies enjoyed the big profits that the poor
    or average person cannot possibly conceive of? Haven’t they set aside any of
    those profits to be used for future foreseeable as well as unforeseen events?

    Why is that? Can anyone explain that to me?

    We give them “tax breaks” so that they can do research and
    development, which it would seem to me should include new ways and techniques
    to replace or reline old pipes. Shouldn’t this R&D address future repairs
    that will keep their facilities in a safe and proper running order?

    Shame on us if we continue
    to allow companies like Chevron to continue to pass on the cost of their
    failures to us!

    In my personal
    opinion, oil companies, as well as banks, investment houses, insurance
    companies, etc., should not (as long
    as they have shown profits and/or pay out bonuses, not to mention exorbitant
    salaries) be able to pass anything along
    to the customer that clearly is the result of their gross mismanagement of
    their company!

    Is it always only the average consumer who has to bear all
    of the responsibility? We do not get to share in their “profits” or their
    bonuses or their enormous salaries so why do we have to share the burden of their
    poor management, planning and errors?

    I say … ENOUGH OF
    THIS NONSENSE!!!!

    • http://pulse.yahoo.com/_WRACM77JT2RXUR3LMGDPPUGUYY Tony M

      [" why, as customers and consumers, do we allow businesses, like oil companies, to keep passing on to us the cost of their inability to manage their operations effectively? Whether it takes the form of worn out pipes, oil spills, the lack of planning for aging components in their systems, the lack of forward planning in general, etc., it amounts to gross mismanagement!"

      Piss and moan all you want, but would YOU invest billions in physical infrastructure in a state where the politicians are hostile to you, and looking for every excuse to shut you down? Short-sighted children like you fail to see the causal relationship between a business-unfriendly environment and a lack of capital investment. If you don’t like the way they do business, don’t buy their products. OTOH, I wouldn’t blame the CEO and Board of Directors one bit if they told California to screw themselves, shut down any existing refineries, and moved out of state.

      • Nunya Beeswax

        You see unfriendliness to business; I see an attempt to hold business accountable for its actions and to ensure that they pay their fair share of taxes. If I permitted toxic waste to contaminate my local water supply, I’d be held responsible : why shouldn’t Chevron? I pay taxes on my earnings : why shouldn’t Chevron?

        We should certainly not be dumping so much on businesses that they no longer find it profitable to stay in California. There is a balance to be struck between allowing industry to get away with anything and choking them. But it seems as though you favor complete deregulation, which is simply insane. Returning to the early 20th century’s business climate would be disastrous, and would result in the elimination of the (already-dwindling) middle class.

        • Calipenguin

          You seem to want to strike a balance between regulation and business success. You picked the current mix of taxes, regulations, and costs as reasonable to you. However, businesses do not report to you are not chained to this state, so they are free to shop around for the most business-friendly cities and states. When they leave they take all their jobs away, and UC has to raise tuition again and again. Don’t think of a rollback as a regression to the early 20th century. Instead, think of how CEOs view the low taxes and regulations in states like Texas. That’s where jobs are moving to every time Californians succumb to communist urges.

          When it comes to investments in oil refineries, think of what you would do if you were Chevron’s CEO. Would you spend millions of dollars to create a state of the art facility when state legislators threaten to increase taxes, drive you out of business, promote alternatives to your product, and give special access rights to car drivers who don’t need your product?

        • http://pulse.yahoo.com/_WRACM77JT2RXUR3LMGDPPUGUYY Tony M

          You have a few reading comprehension issue. Go back and try to read what I wrote with an open mind free of the typical left-wing anti-business animus, and you just might learn something.

    • Calipenguin

      Let me remind you that even though Chevron is a publicly traded company, its owners (stockholders) and officers owe you NOTHING. If you don’t like the way they refine oil or maintain their refineries, you are welcome to shop somewhere else. When there’s an accident they need to pay for hospital bills and damaged private property, but they owe you nothing for the spike in gasoline prices. Why? Because the prices are driven by demand from oil consumers like yourself. There’s a shortage of gasoline, you keep driving your car, so of course prices go up. If you don’t like the laws of supply and demand you’re free to ask Obama to subsidize the price of gasoline for everyone, similar to policies in Iran and Venezuela.

      • Guest

        Except that prices have no particularly good reason to go up, because demand for gasoline is basically fixed. So how does raising the price on gas compensate for it being in short supply? It’s not like it will reduce consumption, since people still need to drive their cars…

        • Calipenguin

          You assume the demand for gasoline is fixed, but it’s not. Oil is a globally traded commodity and 3rd world nations like China, India, and Turkey are rapidly increasing demand for gasoline and diesel. When supply runs low in one part of the world, prices rise in every part of the world. What about refineries? Under our free market system they are free to sell at whatever price the market dictates, and we are free to shop for the cheapest gas stations. Oil is inelastic for people driving to work, but it’s elastic for people driving to 400 miles to Disneyland. You might think a business has no good reason to raise prices, but then what’s your reason for deciding to drive to San Francisco instead of taking BART?

          • Guest

            Oil is not the issue here…gasoline is. This is a refining plant, not an oilfield. The problem is that they are not able to process as much oil into gas, avgas, jet fuel, etc. at the Richmond facility as they could before the accident. But since the demand for these fuels is relatively fixed (most of the gas you burn is probably to do things like go to work, go shopping, pick up the kids, etc.), it’s not like they are trying to quell demand to prevent them from “running out” of gas–since higher fuel prices won’t do a huge amount to decrease consumption. So their main motivation for raising prices would seem to be to just make more money. I can’t see another one. But since Chevron supplies most of the refined fuels for the area (20% gas, 68% 100LL/Jet-A), it’s not like they have a huge amount of competition to mitigate their overly-inflated prices.

            And if you were their competition, what would you do? If you see that they’re selling for $xx.xx then you’ll just bump your price up to maybe 10 cents less than that, since now you’re selling for relatively cheap! And in our wonderful “free” market world, there’s nothing stopping them from doing that.

          • Nunya Beeswax

            Precisely.

  • http://www.facebook.com/palaeologos Matthew Weber

    They’ll take any excuse, won’t they?

    • http://pulse.yahoo.com/_WRACM77JT2RXUR3LMGDPPUGUYY Tony M

      Yawn…

  • Guest

    Nooooooooo my airplane gas will get more expensive!