Chevron Refinery Fire Threatens Southern California's Fuel Supplies
A significant fire broke out at Chevron's El Segundo refinery on October 2, potentially impacting Southern California's gasoline and jet fuel supplies. The refinery, the largest on the West Coast, processes about 290,000 barrels of crude oil per day, supplying roughly 20% of the region's gasoline and over 40% of its jet fuel.
Inventories of gasoline in California were already low in late September due to seasonal maintenance. The fire, which was contained without injuries, could exacerbate this situation. It is likely to cause spot gasoline prices in Los Angeles and San Francisco to spike, with retail prices potentially climbing 10 to 25 cents per gallon in the short term.
If the outage persists, refiners may need to import additional supply from Asia or the Gulf Coast. However, these barrels would not arrive for several weeks, potentially leading to further price increases. California consumers already pay some of the highest gasoline prices in the nation, and this accident could push costs even higher.
The incident highlights California's vulnerability to fuel price volatility and dependence on a handful of refineries. The state's gasoline market is isolated, with limited pipeline connections and specialized fuel requirements. In the event of an extended outage, companies supplying fuel to Southern California, especially those serving the Los Angeles International Airport, may increasingly rely on imports to compensate for the significant supply disruption caused by the fire in the Kerosene production unit.
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