California Refinery Blast Threatens to Bring Back $3 Gas

An explosion at an Exxon Mobil Corp. oil refinery is threatening to boost retail gasoline prices in Los Angeles that are already within cents of $3 a gallon.

Prices at Los Angeles pumps gained 2 cents to average $2.88 a gallon on Wednesday, according to the Automobile Club of Southern California. That was before the blast at the Exxon Torrance refinery, which forced shut two key gasoline-producing units, according to two people familiar with the situation who asked not to be identified because the information isn’t public. Wholesale gasoline in Los Angeles surged to the highest level in more than 17 months.

A prolonged shutdown at Torrance would shrink fuel supplies in California that are already at an 11-year seasonal low. Tesoro Corp.’s Golden Eagle refinery in Northern California, one of nine refineries in the U.S. where oil workers are on strike, halted fuel production this month.

“We’re within 12 cents of $3 gasoline, and it’s not looking good,” Marie Montgomery, a spokeswoman for the Los Angeles-based Automobile Club of Southern California, said by phone on Wednesday. “If this is a long-term outage, it’s probably going to mean a big chunk of supply isn’t available for however long it takes. It would definitely have a cumulative effect and a long-term impact on prices.”

An electrostatic precipitator exploded in a fluid catalytic cracker at the company’s 149,500-barrel-a-day Torrance plant, the two people said. The catalytic cracker is shut, along with the alkylation unit and a pretreater, and other units were coming offline, one of the people said.

Carbob Jumps

“Non-impacted units of the refinery continue to operate,” Todd Spitler, an Exxon spokesman in Beaumont, Texas, said by e-mail late Wednesday.

Spot California-blend gasoline, or Carbob, in Los Angeles jumped 8.5 cents a gallon to 38 cents above futures on the New York Mercantile Exchange on Wednesday, data compiled by Bloomberg show. It’s the biggest premium since Sept. 12, 2013.

“Anyone who’s short in this market needs to cover because they’re not sure where the next barrel of gas is going to come from,” David Hackett, president of energy consulting company Stillwater Associates in Irvine, California, said by phone on Wednesday.

The incident began at about 8:50 a.m. local time on Wednesday, Spitler said. Four contract workers were taken to the Long Beach Medical Center for evaluation of minor injuries. The Torrance Fire Department called for a voluntary shelter-in-place order near the refinery, he said.

The state Division of Occupational Safety and Health has issued an order that keeps the fluid catalytic cracker shut until Exxon shows it’s safe to restart. Agency spokeswoman Erika Monterroza said by phone on Wednesday that she didn’t know when the order would be lifted.

Exxon “really has the responsibility of making it safe,” Monterroza said. “And then they have to demonstrate to us that it’s safe.”

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