Further Oil Price Increase Expected in Southern California with Huge Fire in Cherry Point Refinery

Gasoline prices in Southern California are already reaching an average high of $4 a gallon. This may climb further due to a big fire at an oil refinery in the West Coast.

A huge fire happened in BP Arco’s Cherry Point refinery close to Blaine, Washington. According to the filed incident report, a main link was terribly burned that experts of BP are still waiting to analyze it in the coming days to evaluate the damage.

The crude procession unit’s loss results to the inability of the refinery to obtain its crude oil throughput of 230,000 barrels daily. That quantity mostly comes from Alaska.

Alaska is where gasoline blends are refined to comply with the strict smog regulations of California. Then the produced crude oil is shipped through tanker ships in the southern parts of California.

According to a BP statement to the Bellingham newspaper, Cherry Point’s entire output may be reduced by 50% in the coming days and may even extend up to the next months.

The refinery may still be able to manufacture diesel or gas by utilizing stored oil on its site that is semi-refined orĀ  from other supplies.

Los-Angeles based traders of refined products such as gasoline said that wholesale crude oil prices in the area recently increased by 7.5 cents a gallon when the Cherry Point news came out.

Prior to the increase, oil prices had already jumped by 33.5 cents a gallon in just a single month, said traders in a business wire of Reuters.

Wholesale gasoline prices also grew along the United States’ West Coast and Canada due to the refinery’s location at the border of Canada and the United States; the refinery sells wholesale crude to markets between Vancouver and San Diego.

The negative news arrived as retail gas prices in the Southland reached the $4 mark a few days ago. The latest average price for unleaded gasoline was at $4.07 per gallon in the County of Los Angeles. According to the data of the Oil Price Information Service and the AAA, that rate was higher by 51.4 cents compared to last year.

By Chris Termeer