Posted on 08/25/2005 12:47:45 PM PDT by SmithL
The specter of $3 a gallon gasoline loomed closer Thursday as panicky buyers drove the wholesale spot market price sharply higher after a fire Wednesday damaged a key gasoline manufacturing component at the Golden Eagle refinery in Martinez.
Gasoline that meets California's strict anti-pollution standards recently traded at $2.17 a gallon in the Bay Area wholesale spot market, up 13.5 cents or 6 percent from the closing price Wednesday, according to Denton Cinquegrana, an analyst for the Oil Price Information Service.
A fire lasting from 4:15 p.m. to 5:05 p.m. Wednesday shut a fluid catalytic cracking unit at Golden Eagle but caused no injuries, according to Sarah Simpson, a spokeswoman for San Antonio-based Tesoro Corp., the refinery's owner. Tesoro's own emergency crews responded and government agencies were notified, she said.
That unit remained shut down mid-day Thursday as the company investigated the cause of the fire and planned "a course of action," Simpson said.
Some observers estimated that a restart of the affected unit might take at least two to three days, while some news reports predicted at shutdown of from seven to 10 days. Simpson declined to comment on that estimate.
Golden Eagle, one of five Bay Area refineries that produce gasoline and other fuel for Northern California, can refine 168,000 barrels of crude oil each day. The shutdown of a catalytic cracker might typically reduce gasoline output by 50 percent, or about 6 million gallons a day, said David Hackett, president of Stillwater Associates LLC, an energy consulting firm.
That news drove prices up, said Cinquegrana: "Trading activity feeds on this kind of stuff."
Gasoline prices displayed on thousands of street corner provide even casual shoppers with clear signals about market conditions. By comparison, the wholesale gasoline market remains highly opaque and shrouded in mystery.
Most gasoline is sold under long-term arrangements between refiners and affiliated retailers. However, wholesalers with contractual obligations to deliver gasoline use the spot market to cover unexpected shortfalls in production and inventory.
Crude oil prices that reached $68 a barrel and worries that Hurricane Katrina might further reduce oil production in the Gulf of Mexico also pushed up wholesale gasoline prices on the New York Mercantile Exchange, contributing to the price pressure here. But the differential between Bay Area prices and the Nymex benchmark widened by several cents, Cinquegrana said. News of the local fire was also a factor in Nymex price run-up, he said.
Golden Eagle is "specially designed to process heavier crude oil feedstocks such as those from Alaska's North Slope and California's San Joaquin Valley," according to the company's web site. Crude goes to the refinery by tanker and pipeline.
I would say building MORE refineries would be a better solution. You can have a lake of oil but if you only have 50% of the refinery capacity (est)that your country needs, it's trying to funnel Niagara Falls through a straw.
That was sarcasm, right?
Can't sneak one by you, huh?
; )
Carolyn
The local politicians in this refinery's area have passed enough restictions on building or upgrading refineries, that no one is willing to build or expand.
When will we build new and more refineries? When will we drill in ANWAR?
When will we be realistic about the way the world really is? When will we be realistic about Islamofascism's war against Western civilization? When will we understand the world's leftist socialists war against us?
I think liberals should set a good example for the rest of us by not driving or riding in motorized vehicles any more.
I would say building MORE refineries would be a better solution.
-----
The chances are slim. That would mean more supply and the oil companies might actually have to compete for your business -- AT THE PUMP !!! Don't hold your breath.
One possible scenario is that if gas prices are capped, gas companies won't ship products to Hawaii. Then, once people start seeing gas lines and shortages in Hawaii, the rest of the nation will panic, and perhaps sluggo Republicans will get off their butts.
I was stationed in Hawaii during the great toilet paper shortage scare. The first rumor of a gas shortage will shut down the Islands altogether.
It's remarkable how many refinery accidents there've been of late.
FYI again.
There also seems like no shortage of gasoline ... maybe those record oil profits become additive..
It's remarkable how many refinery accidents there've been of late.
You have them when you have to run them full blast to meet demand!
Oo, I just re-read my post and it reads like I'm joining the tinfoil brigade. Sorry.
Somebody in another gas thread predicted it would be three dollars nationwide by labor day. He got jumped on /chastized by a whole bunch of people. Most laughed at him. Wonder if they're laughing now? It jumped to $2.69 here in northwest Ohio Thursday. Not too far to go, and they've got plenty of time.
I started this post over a year ago-
Sticker Shock-$3 a gallon gas? Click the picture:
- and you'll notice the first reply is derisive.
As you say, who's laughing now? $2.59 a gallon at last fillup, and no end in sight. The ElCheapo ( yeah, right! ) down the street quit updating their price signs a couple of weeks ago-- guess they got tired of changing them every day.
Shell also had a problem...they are saying over $3 by Monday
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