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Thursday, Aug 9, 2012 7:15 PM UTC

Gas prices rise; officials wait to enter refinery

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Topics: From the Wires,

SAN FRANCISCO (AP) — The same federal investigators who probed the Gulf Coast oil spill were waiting Thursday for access to the charred crude oil unit of a Chevron refinery where a fire has helped push gas prices close to $4 a gallon along the West Coast after sending a towering plume of black smoke into San Francisco Bay area skies.

The U.S. Chemical Safety Board team was waiting with state and company inspectors to do structural and environmental tests to see if it was safe to enter the unit and determine when production might resume after the Monday night blaze.

“This is an important accident in its own right, it was a large fire and has the potential to affect fuel supplies and prices,” said Dr. Daniel Horowitz, a member of the chemical board. “And there are community concerns which we’ll also be evaluating, including the emergency response system.”

The average price of regular gasoline jumped in California from $3.86 a gallon on Tuesday to $3.94 on Thursday, according to the website GasBuddy.com.

Some experts expect the disruption in production to last for weeks and push prices beyond $4 a gallon.

“It’ll depend on Chevron getting their facility repaired,” said Patrick DeHaan of GasBuddy.com. “The increases will be felt in California, Oregon and Washington, with perhaps some residual issues in Arizona and other nearby states.”

The Richmond refinery produces 16 percent of the region’s daily gasoline supply. The fire knocked out a unit that makes a specialized blend of cleaner burning gasoline that satisfies air quality laws in California, Oregon and Washington.

Sean Comey, a spokesman for Chevron, said myriad factors were pushing gas prices higher, not just the loss of one unit at the refinery.

“The fire at our Richmond refinery is only one factor influencing prices,” he said. “There are a variety of economic conditions like rising crude and ethanol costs, which also effect what consumers pay at the pump.”

Experts said inventories of the cleaner burning gas already were low. With the refinery’s output in question for what could be weeks, analysts say prices could reach $4 a gallon by Friday.

“California has the cleanest burning gas in the nation, so this is definitely a market disruption,” said Rayola Dougher, a senior economic adviser with the American Petroleum Institute.

California can’t replace those supplies with imports from Washington state, Asia and the Gulf Coast, so it’s more difficult to ease the impact of the lost production, Dougher said.

Comey said the company could not estimate when the damaged unit would be back online.

Chevron also said it did not know when investigators would have access to the site. Still, government investigators expected testing to be completed Friday.

Once the unit is open to inspectors, the process of determining the cause of the vapor leak that led to the towering fire can start. Then, after evidence is collected, Chevron can begin getting the unit back up and running.

Meantime, hundreds of people contacted attorneys and were expected to file claims against Chevron for breathing problems and other health issues stemming from thick black smoke that spewed from the facility during the fire.

The company has set up a compensation funds and distributed phone numbers that can be used to file claims. The initial phone lines were overwhelmed by callers, and the company said it was arranging help to meet the demand.

Jason Dearen

More Jason Dearen.

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