Something Stinks and It’s Refineries

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Today’s explosion at the Torrance refinery couldn’t come at a better time—for refiners interested in driving up the price of gas.

That’s why we are calling for the California Attorney General, Governor, and lawmakers to step in. We want the Attorney General to send in some boots on the ground to rule out any price manipulation by Tesoro when it shut down its Martinez refinery. We also want to know what first caused Exxon to tell one observer that its Torrance refinery would be offline for two weeks due to a mechanical problem, and then what caused an explosion at the refinery today.

We want law enforcement going forward to investigate whenever a refinery announces a planned or routine shutdown to verify there is no price manipulation behind it. We want this because only 14 refineries control the California market where we make most of our own special blend of gasoline and keep on hand only a ten-day supply, not the 24-day average supply kept in other states.

On Sunday, February 1, as the nationwide steelworker’s strike loomed, Tesoro said its Martinez refinery was operating at half staff for planned maintenance, but that “the safest operating option” was to shut down the Martinez refinery entirely.

Nevertheless, the company said it would be no problem for Carson—and its Anacortes refinery in Washington state—to continue to operate. In fact, Tesoro’s CEO Geoff Goff, told investors last week, “We can continue on running with the staffing levels that we have….for a very long period of time.”

Now, we’ve got the Exxon Torrance refinery incident.” Today, we see the Torrance refinery suffered an explosion, and is flaring fire and black smoke from its stacks. Toxic ash is raining down on surrounding neighborhoods.

If refineries are so automated that you don’t need much human intervention, there is no reason why the Martinez plant could not have stayed open with half its staff, especially when managers, former employees, and contract workers appear to be plentiful and ready to step in at other refineries.

And if refineries are so cautious, so worried about safety, then why the explosion at Exxon’s Torrance refinery?

Could it be that Tesoro, which operates two other refineries in California, used the steelworkers’ strike to shut down the Martinez refinery to drive up the price of gasoline? Regardless of its cause, the Torrance explosion is sure to drive prices up still higher and was manna from heaven for Tesoro and other refiners.

With both the Martinez refinery and the Torrance refinery offline we are now missing 16 percent of the state’s refining capacity. California gas prices jumped 27 cents per gallon since February 6, while prices in the rest of the country jumped an average of only a dime. We can expect prices to rise another ten cents a gallon here in California in the next few days.

The recipe is simple: sell less gas; make more money. And don’t worry if you happen to get sloppy. You might miss out on the gas bonanza temporarily, but in California any fines end up being just a cost of doing business.


Liza Tucker
Liza Tucker
Liza Tucker is a consumer advocate for Consumer Watchdog, following everything from oil and gas to the regulation of toxic substances in the state of California. She comes to us from Marketplace, the largest U.S. broadcast show on business and economics heard by ten million listeners each week on 400 radio stations. Liza worked at this public radio show for a decade, first as Commentary Editor and then as Senior Editor for both Washington and Sustainability News.

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