Economy
3:23 pm
Thu August 9, 2012

California Refinery Fire Could Cause Gas Price Hike

Northwest drivers could be paying more at the pump. That’s because this week’s refinery fire in California is likely to affect gas prices.

Analysts say get ready to pay as much as four dollars or more per gallon. You can blame the refinery fire in California for the spike. But what does that have to do with fuel prices here?

“We’re locked together at the hip by refinery system on the West Coast,” says Dave Overstreet. He’s Public Affairs Director for AAA Washington. He says there are a limited number of oil refineries in the West Coast. They’re also isolated from the main refineries in the Gulf Coast area.

So when a major incident happens in one facility, like the fire in Richmond, California, it creates a chain reaction that affects the entire West Coast’s oil supply.  “The West Coast, when there’s a problem at a refinery like this, more or less rallies together and says how are we going to make up for this lost gasoline from this fire? And the way we do that is simply, some of the product that is refined here in the Northwest will be shipped down there to help out with the shortage.”

So when oil is in short supply, gas prices go up. Other factors come into play. For example, the drought in the Midwest is also driving up the cost of ethanol.

Overstreet says the refinery in California produces 16 percent of the West Coast’s daily gasoline consumption.

It’s not clear how long the impact on gas prices will last. Investigators are assessing the refinery’s damage. They still don’t know what caused the fire.

Copyright 2012 Northwest News Network

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