Friday, August 26, 2005

Refinery breakdowns mean higher prices

If you recall the winter of 2000-01 and how just as electricity prices peaked, the generation California needed started to break down, your eyebrows will raise when you hear about what's happening with oil refineries in the State:

Just when it appeared gasoline prices had peaked, California drivers got a double dose of bad news Thursday with reports of breakdowns at two refineries that could tighten supplies and send the price of a gallon of regular roaring past the $3 a gallon mark.

After hitting a record high of $2.805 on Monday, prices inched down slightly more than a cent, to $2.794, by Thursday, according to the Automobile Club of Southern California. This led to ever-so-brief optimism that the summer run-up had run its course, only to be dashed by news of a fire at Tesoro Corp.'s Martinez refinery. There also were reports that Shell Oil unexpectedly shut down machinery at its facility in Martinez as well, although the company would not confirm the information.

After the news, the state's rumor-roiled spot market shot up 13 cents in one day, leading Oil Price Information Service West Coast market editor Denton Cinquegrana to predict a quick hike at the pump.