Business & Economy

Refinery explosion: As investigation continues, will gas prices be affected?

An explosion at an ExxonMobil refinery in Torrance caused four minor injuries on Wednesday, February 18, 2015.
An explosion at an ExxonMobil refinery in Torrance caused four minor injuries on Wednesday, February 18, 2015.
Daniella Segura/KPCC
An explosion at an ExxonMobil refinery in Torrance caused four minor injuries on Wednesday, February 18, 2015.
An explosion at an ExxonMobile refinery in Torrance caused four minor injuries on Wednesday, February 18, 2015.
Daniella Segura/KPCC


As investigation continued Thursday into an explosion at the Exxon Mobil refinery in Torrance a day earlier, portions of the facility remained closed, and some are speculating the area could see an uptick in gas prices as a result.

The blast occurred in a fluid catalytic cracking unit, Erika Moterroza, a spokeswoman for the California Division of Occupational Safety and Health, told the Los Angeles Times.

Cal/OSHA ordered all work at the affected unit to be shut down and remain so until Exxon Mobil can demonstrate it can be safely operated, the Times reports, noting that the refinery processes an average of 155,000 barrels of crude oil per day and produces 1.8 billion gallons of gasoline a year.

Marie Montgomery of the Automobile Club of Southern California told City News Service the explosion "most likely will contribute to upward pressure on (gas) prices."

"If there is extensive damage that results in a longer-term closure, obviously that (would) have a bigger impact," she said.

Gordon D. Schremp, a fuel specialist at the California Energy Commission, also said the shutdown could lead to some increases in gas prices.

"That refinery is about 8 percent of the state's refining capacity so it's important like all big refineries in California," he told KPCC. "We do expect to see some tightness in the fuel supply market with an expected increase in wholesale and retail prices over the next number of days."

Schremp said that due to the location of the refinery, Southern California would see a slightly more of an increase than Northern California.

At the same time, a refinery shutdown could become a motivation for other refineries in both regions, according to Denton Cinquegrana, chief oil analyst of the Oil Price Information Service.

"[Refineries] in Southern California as well as Northern California are going to be motivated to run and produce as much gasoline as they can, because with one refinery kind of on the disabled list, you're going to be able to get better margin on the products you produce with one guy down," he said.

Cinquegrana said that the Torrance refinery had been slowing down due to maintenance activities and that the shutdown would only add to the existing tension in production.

"It is not uncommon to see the California market in particular rally this time of year, because in Southern California we're switching over to the summer grade of gasoline," Cinquegrana said.

How much gas would actually increase due to the shutdown depends on when the refinery would return to normal production, he said.

"In the grand scheme of things, I don't think gas prices are going to go to $4 or $5 a gallon. I do think, though, you are going to go back to $3 and above," he said.