Explaining Southern California's economy

Why is BP selling its refinery in Carson, California?

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Matt DeBord/KPCC

These stations belong to Texas-based Tesoro now. BP is selling the Arco brand, along with a big refinery in California

As the L.A. Times rightly points out, the fire at Chevron's Richmond refinery in Northern California — and the ensuing spike in gas prices — has overshadowed a deal between BP and Tesoro of take over a big BP refinery in Carson:

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.

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Say goodbye to Arco in Southern California

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David McNew/Getty Images

An Arco gas station in Pasadena. It won't be around for much longer.

This just in — really! BP has informed operators of its Arco stations in Southern California that it won't be renewing leases with Thrifty Oil, which owns the current Arco sites, according to the OC Register. Arco has been in SoCal for 46 years and currently occupies 257 locations, so this is no small deal. USA Gasoline will take their place.

USA Gasoline is owned by Tesoro, which is more of a refiner that sells its gas at its own locations, along the lines of Valero. BP of course is a vast multinational energy company whose core business is oil extraction.

There's another wrinkle to the story, in this period of steep gas prices in our region. From the OC Register:

The move by BP has set off a firestorm of protest among the 106 Arco franchisees, many of whom own multiple stations and stand to lose their entire investment. About 2,000 Arco workers also will lose their jobs

It also raises questions about what will happen to gasoline prices when Arco, known as the low-price leader, is no longer in the market.

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