By Nathan Risser | Bloomberg
A fire Monday at Valero’s Benicia refinery leaves only one gasoline plant still operating in the San Francisco Bay Area, putting pressure on prices ahead of peak driving season and stymieing Governor Gavin Newsom’s efforts to offer relief to Californians.
Chevron’s Richmond refinery currently is the only plant in Northern California able to make up the fuel shortage after Phillips 66 and Marathon Petroleum converted their operations to renewable fuels — diesel and jet, but not gasoline — in recent years.
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The premium for California gasoline, known as Carbob, compared to Nymex futures jumped 10 cents Tuesday in the Bay Area and in Los Angeles, according to data from General Index. On Wednesday, the Bay Area Carbob premium to Nymex rose another 12 cents to the widest since October 2023.
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There’s likely little relief ahead of Memorial Day, which marks the beginning of peak summer driving season when higher demand makes gasoline more expensive.
The state is a fuel island where outages at its few remaining refineries have an outsized effect on prices compared to more well-supplied US regions such as the Gulf Coast. Those regions have seen refining capacity grow in recent years, while on the West Coast it has shrunk. Limited pipeline infrastructure for imports also means that when a refinery goes down in California, drivers pay the cost, which already is the highest in the nation.
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Still, average prices across California Wednesday were 55 cents a gallon cheaper than the same time last year and $1.65 less than the highest-ever recorded average in the state, $6.44 a gallon in 2022, according to American Automobile Association data.
That record prompted Newsom to sign a series of bills aimed at regulating the refining industry to control price spikes. The governor has since written to the state energy agency ordering it to collaborate with the industry he previously called the “polluted heart of this climate crisis.”
Benicia’s shutdown of a key gasoline making unit, the 77,000-barrel-a-day fluid catalytic cracker, follows a fire at PBF Energy’s Martinez refinery earlier this year that closed its 67,000-barrel-a-day fluid catalytic cracker.
The Benicia plant also is the latest in a string of California refiners to announce plans to convert or shutter operations. Phillips 66 is closing its Los Angeles refinery later this year.
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