Refinery Fire Causes Price of Gasoline to Rise in California
Chevron's (NYSE: CVX) Richmond refinery in California caught fire on Monday. The Richmond refinery is one of the largest crude processing plants in California. According to the Richmond Police, the fire was put out at about 10 a.m. ET.
Chevron is maintaining a small, controlled burn of crude in order to relieve pressure and reduce the amount of toxins released into the atmosphere. Many of the residents in the area were ordered to stay in their homes with their doors and windows closed. Some people did go to the hospital stating that they had respiratory problems. About 200 people were hospitalized, but no one was killed during the fires.
Besides the obvious health and safety issues that the fire produced, gas prices have already increased in California. On Tuesday, a gallon of gas in California cost $3.86, compared to the national average of $3.63. The facility accounts for about 10% of the West Coast refining capacity. Chevron announced that the refinery is still operating following the fire, but it is unknown as to when the facility will be able to operate at full capacity.
Other companies that have refineries on the west coast could benefit from the lack of supply due to the fire. Tesoro Corporation (NYSE: TSO) sells gasoline, diesel fuel, and convenient items primarily on the West Coast. BP (NYSE: BP) owns the Carson refinery in California, which could see an increase in demand due to the decrease in supply in the area. Tesoro traded up about 5.5% and BP traded up about 3% on Tuesday.
California is vulnerable to spikes in gas prices because of how far away it is from the majority of refineries in the Gulf. The Richmond Refinery is one of the major producers of crude in California. The refinery produced about 150,000 barrels of gasoline a day, which is about 16% of California's total gas consumption per day.
Chevron Corporation traded up about 1% on Tuesday.
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