Chevron Fire May Lead To Higher Calif. Gas Prices

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A fire at a Chevron oil refinery near San Francisco will likely push up gasoline prices in California. The state has strict environmental rules that require a special blend of gas for motorists, so it's not as simple as merely importing gas from other states.


Here in the U.S., analysts are trying to figure out what affect an oil refinery fire could have on gasoline prices. The fire erupted Monday night at an important refinery in Richmond, California. It's owned by Chevron Corporation. It was extinguished within five hours, but could have a lasting impact.

NPR's Richard Gonzales reports that gas prices are expected to shoot up in an already expensive market.

RICHARD GONZALES, BYLINE: The Chevron Richmond refinery is one of the country's biggest, processing up to 240,000 barrels of crude oil every day.

Officials have yet to determine the extent of the damage, but flames that could be seen for miles away and video of the fire already has had a psychological impact on the market, says Denton Sinquegrana, executive editor with the Oil Price Information Service.

DENTON SINQUEGRANA: Based on what we see in the wholesale market, you know, right now the California average is about $3.86 a gallon, I honestly would not be surprised if we saw, you know, a four-dollar average in California as soon as within the next week.

GONZALES: That would be an average price hike of 14 cents a gallon. Other analysts are predicting a hike of 30 cents a gallon.

California has strict environmental rules that require a special blend of gas for motorists, so it's not as simple as merely importing gas from other states.

Economist Christopher Thornberg of Beacon Economics says higher gas prices could be disruptive, but might also be a boost for more fuel efficient vehicles.

CHRISTOPHER THORNBERG: So in other words, if the damage is extensive, you probably should go out and buy yourself a Prius dealership. If it's not, perhaps you want to stick to a Hummer One.

GONZALES: More than 200 local residents sought treatment at nearby hospitals for breathing problems. Chevron officials have apologized to the community for the fire.

Richard Gonzales NPR News San Francisco.

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