Unplanned maintenance will slow production, oil firms say
The Desert Sun (Palm Springs, CA)
Just when you thought gasoline prices were dropping down to earth, a gust of refinery problems might blow the cost of California fueling back up to its record perch.
The Shell and Valero oil companies confirmed Friday that their refineries in Martinez and Benicia, respectively, were recently forced to begin unplanned maintenance that would slow production of gasoline and diesel fuel.
As a result, spot prices in the Los Angeles and Bay Area markets rose throughout the week, which usually translates to higher prices at the pump.
And it doesn’t help that the Independence Day holiday is right around the corner.
“I think the drop in prices that we’ve seen will stop, and they’ll actually take back the six- or seven-cent decrease we’ve seen the past few weeks,” said Bob van der Valk, bulk fuels manager for Cosby Oil. “Because of the state’s lack of refineries, production needs to run at full capacity to meet our demand for gas. It’s going to be even more difficult to meet that demand since it will rise during the holiday weekend.”
The two refineries will affect different areas of fuel. The Shell site is a heavy producer of gasoline, while the Valero refinery produces mostly diesel.
The Riverside/San Bernardino area average gas prices are $2.292 – a drop of slightly more than 10 cents since reaching a record high on June 1, according to the AAA Daily Fuel Gauge Report.
Diesel prices stood at $2.131, still significantly lower than the May 14 record high of $2.478.
A Shell press release did not say how long the maintenance would take, but van der Valk estimated it would be two weeks. A Valero release said its repairs should be completed by the beginning of July.
The Shell announcement comes on the heels of reports that its Martinez and Bakersfield refineries will taper off production through Labor Day for “routine maintenance.”
The report, derived from internal documents leaked to the Los Angeles Times, angered consumer groups like Foundation for Taxpayer and Consumer Rights.
The maintenance, taking place during the summer driving season, is “a tactic to reduce supply also used by electricity producers during California’s energy crisis,” according to a statement from the FTCR.
Trey Clark can be reached at [email protected] or 778-4645