Chevron’s Richmond Refinery Fire Could Cause Gas Price Spike in CA

Chevron’s Richmond Refinery Fire Could Cause Gas Price Spike in CA
By Chevron Corp. ( [Public domain], via Wikimedia Commons

Chevron's Richmond Refinery Fire Could Cause Gas Price Spike in CA

Last night, fire broke at Chevron’s Corporation (NYSE:CVX) Richmond oil refinery in California, which forced the company to shut down its No.4 crude unit. The cause of the fire hasn’t been identified yet, but the company officials said there was a blaze at the No.4 unit. The company’s crew members were investigating a leak in the unit, and soon they realized that the leak couldn’t be controlled immediately, so all the workers were moved away from the area. Within a few minutes of their moving out, the fire broke out, said Heather Kulp, Chevron spokeswoman.

No casualties or major injuries were reported. One of the operators had burns on his wrist, which was treated immediately. The fire and black smoke rose all over the Bay area, raising concerns over health and safety of people residing nearby. Over 160,000 residents were ordered to stay indoors and keep the windows, doors, vents, and fireplaces closed. The company officials said there were no explosions, but local residents claim to have heard four loud booms.

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The fire at America’s third largest refinery has been controlled now, but the experts have maintained a small, controlled burn in the unit to relieve the pressure. The company hasn’t declared when it will restart No.4 unit. The good news is that the order for people to stay indoors has been lifted. Late last night, the Chevron officials held a press conference to apologize to the residents in Contra Costa County. They promised that the company will do everything to ensure it doesn’t happen again.

Chevron Corporation (NYSE:CVX) has over 1,200 workers at the Richmond refinery, and they have all been trained for disasters and fires. Last time the refinery had caught fire, was in January 2007.

Oil Prices in California May Go Up

Shutting down the No.4 unit, which has a daily output capacity of 257,200 barrels, may push up the gasoline prices in California region.

“The market will take a pop first thing in the morning, ahead of any action by Chevron,” David Hackett, the president of Stillwater Associates in Irvine, California, told Bloomberg News. “If Chevron Corporation (NYSE:CVX) comes out as a buyer [today], then the market will continue up.”

California doesn’t have many refineries, so the state is heavily dependent on the Richmond refinery. If it remains closed for an extended period of time, the entire West Coast will see gasoline prices going up.

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