Tag Archives: Chevron El Segundo Refinery

California oil: Refinery profit margins rise during price spikes

Repost from The San Francisco Chronicle
[Editor:  Significant quote: “A new report from the nonprofit group Consumer Watchdog argues that refinery profit margins in the state rise during price spikes — even when a company has to buy extra wholesale gasoline to make up for refinery downtime.”  – RS]

Refinery ills push price of gasoline up sharply

Higher crude costs add to spike at pump
By David R. Baker, 4 May 2015, 7:23 pm
The ExxonMobil refinery is seen after an explosion in a gasoline processing unit at the facility, in Torrance, Calif., on Wednesday, Feb. 18, 2015. Two workers suffered minor injuries and a small fire at the unit was quickly put out. The incident triggered a safety flare to burn off flammable substances. The facility about 20 miles south of downtown Los Angeles covers 750 acres, employs over a thousand people, and processes an average of 155,000 barrels of crude oil per day, according to the company. (AP Photo/Nick Ut) Photo: Nick Ut, Associated Press
The ExxonMobil refinery is seen after an explosion in a gasoline processing unit at the facility, in Torrance, Calif., on Wednesday, Feb. 18, 2015. Two workers suffered minor injuries and a small fire at the unit was quickly put out. The incident triggered a safety flare to burn off flammable substances. The facility about 20 miles south of downtown Los Angeles covers 750 acres, employs over a thousand people, and processes an average of 155,000 barrels of crude oil per day, according to the company. (AP Photo/Nick Ut) Photo: Nick Ut, Associated Press

California’s gasoline prices jumped 31 cents in the last week, pushed higher by rising crude oil costs and problems at several state refineries.

It’s the second time this year that California drivers have faced such a steep price spike. And it has some oil company critics livid at a state gasoline market they say is designed to fail.

“This is a problem that only benefits them, to the expense of California consumers,” said Tom Steyer, the billionaire environmental activist who has pushed to raise the oil industry’s taxes in the state. “When you look at an oligopoly, is there anyone there with an incentive to solve this problem? I would say no.”

The average cost of a gallon of regular in California hit $ 3.71 on Monday, according to GasBuddy.com. Less than a month ago, in mid- April, regular was selling for less than $ 3.10.

And while gas prices have been moving higher nationwide, California has by far the nation’s priciest fuel. Even Hawaii currently pays less, with an average of $ 3.20. The national average stands at $ 2.63, according to GasBuddy.com.

Part of the problem lies in crude oil prices, which have risen 34 percent since mid-March. But California’s sudden price surge also reflects unique aspects of the state’s gasoline market that have frustrated drivers for more than a decade.

California uses its own pollution-fighting fuel blends not found in other states. As a result, most of California’s gasoline is made by 14 refineries located within the state’s borders. The state also has some of the country’s highest gasoline taxes — almost 66 cents per gallon. And starting in January, California’s cap-and-trade system for reining in greenhouse gas emissions added 10 cents to the overall cost, according to estimates.

Since only a limited number of refineries make California grade gasoline, any hiccup in production can move prices. In February, Tesoro temporarily shut down its Martinez refinery in response to a labor strike, and an explosion hobbled Exxon Mobil’s refinery in Torrance ( Los Angeles County). Prices soared for four weeks.

Analysts blame the current spike on production glitches at the Tesoro refinery in Martinez and the Chevron refinery in Richmond, which suffered a flaring incident on April 21.

In addition, the Oil Price Information Service reported last week that Chevron took down a key unit at its El Segundo ( Los Angeles County) refinery for maintenance, prompting the company to buy up extra gasoline supplies on the wholesale “spot” market to fulfill its contracts to fuel distributors. A Chevron spokesman declined to comment on the El Segundo refinery.

The price spike may be easing, with the statewide average rising just 1 cent overnight from Sunday to Monday. Wholesale prices are already started to fall.

Consumer advocates have long argued that the oil companies benefit from keeping gasoline supplies tight in California, with too little fuel held in storage for when the next refinery breakdown strikes.

A new report from the nonprofit group Consumer Watchdog argues that refinery profit margins in the state rise during price spikes — even when a company has to buy extra wholesale gasoline to make up for refinery downtime. Soaring retail prices more than make up for the added expense of buying extra supplies, said Jamie Court, the group’s president.

“The oil companies know that even if it’s their refinery that’s knocked out, the higher prices will more than compensate them,” he said.

Court wants the state to require oil companies to maintain a specific amount of fuel in storage, to prevent or at least lessen future price spikes.

The U. S. Department of Energy is studying the idea of a fuel “reserve” on the West Coast — similar to the nation’s Strategic Petroleum Reserve — but has framed it as a way to prevent supply disruptions after natural disasters, such as earthquakes or tsunamis. Tupper Hull, spokesman for the Western States Petroleum Association, said California officials have considered the idea before — and rejected it as unworkable.

“Intuitively, setting aside large volumes of fuel from the market is not going to help,” Hull said.

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20 By 2020: A Pledge To Reduce Bay Area Refinery Pollution

Repost from SWITCHBOARD, Natural Resources Defense Council Staff Blog

20 By 2020: A Pledge To Reduce Refinery Pollution

By Diane Bailey, October 9, 2014

Diane Bailey

The Bay Area Air District has been working for the past two years to craft regulations that track and limit refinery pollution as oil companies begin bringing in extreme new types of crude oil that put workers and refinery fenceline communities at risk.  Facing much more pollution from refining extreme crude oil, like tar sands and Bakken crude, and in the aftermath of the massive August 2012 fire at Chevron Richmond, a number of community and environmental advocates got together with refinery workers at the start of the rulemaking effort.  (below, the Chevron refinery and tanks loom large over North Richmond; Photo Credit: Environmental Health News)

Chevron richmond homes.jpgWe came up with the Worker-Community Approach to not only ensure that pollution would not increase from refineries but to track crude oil used and achieve continual progress on air quality by reducing 20 percent of refinery pollution by 2020.

Our challenge to the Bay Area Air District and to all Chevron tankfarm homes.jpgfive oil companies with refineries in the region is that given the tremendous amounts of pollution pumped out by refineries and impacting the health of fenceline communities every day, will they work together to commit to cutting pollution by 20 percent by 2020?  Here are five things you need to know about refinery pollution in the Bay Area that help explain why Refineries in the Bay Area are much more polluting than other refineries and can easily reduce 20 percent of their toxic emissions over the next five years:

1)      According to US EPA Toxics Release Inventory (TRI) Data: Bay Area refineries, on average, report more than twice the toxic chemical releases reported by Los Angeles Area refineries.

2)      According to the California Air Resources Board, emissions inventory data, Bay Area refinery emissions are estimated to decrease by 50 percent or more by 2020, making a 20 percent reduction by 2020 seem easy.  But projections are one thing; we need a reliable commitment in writing.

3)      The CARB emissions inventory data also shows that Bay Area Refineries currently emit 7 times more nitrogen oxides (NOx), 3 times more sulfur dioxide and at least a third more organic hydrocarbons (like benzene) than Southern CA refineries, yet Southern California refineries collectively have over a third more capacity.

4)      According to regional air district data, the Chevron Richmond refinery is much more polluting than its El Segundo “twin” that has the same design; Chevron Richmond emitted more than twice as much organic hydrocarbon and particulate matter (PM) and eight times more toxic benzene than the El Segundo refinery in 2012.  Going back to TRI emissions, Chevron Richmond released over 80 percent more toxic air pollution than Chevron El Segundo in 2011.

5)      According to a 2013 Statewide Audit, on a rough per gallon of gasoline basis, Bay Area Refineries are 50 percent more climate polluting, twice as polluting for organic hydrocarbons and NOx, almost 20 percent more polluting for PM and leak over three times as much benzene and almost five times as much formaldehyde relative to gasoline produced in Southern California.

Wouldn’t it be great if Bay Area refineries – Valero, Chevron, Tesoro, Phillips 66 and Shell – took the 20 by 2020 pledge?  They could use the same modern pollution controls that refineries in Southern California have installed.  This kind of commitment to clean air, is not only doable technologically, it is a smart approach to being a good neighbor and supporting community health.  The proactive Worker-community Approach to improving air quality also ensures that we won’t see an increase in pollution as oil companies bring more extreme crude oil into the region.  In fact, we would like to see refiners take a good neighbor pledge not to bring any extreme, dangerous crude oil into the Bay Area at all.  At the very least, they should pledge a 20 percent reduction of toxic pollution by 2020.  They did it in Southern California; Bay Area communities deserve no less.

THE PLEDGE:  A Worker-Community Approach to Emission ReductionsIn order to address the ongoing health hazards in refinery-impacted communities and prevent any increases in pollution caused by changing crude oil, the refinery rule should require:

1)  Each refinery is required to decrease refinery-wide emissions of pollutants that create environmental health hazards by at least 20 percent below the refinery’s baseline by 2020, showing adequate incremental progress of at least two percent each year;

OR

2)  If these reductions aren’t possible, a refinery needs to show that they are using the best available emission control technology (BACT) throughout the refinery (i.e., eliminate “grandfathered,” “non-BACT” and “exempted” sources in the refinery).


Sources & Notes:
  1. Refinery Capacity vs. Throughput: Refinery comparisons were adjusted by capacity as reported to US EPA and to the California Energy Commission.  Although annual crude oil throughput would be a better comparison point, it is not publicly available.  Thus an imperfect assumption that most refineries utilize most of their capacity must be made in order to compare emissions.  According to CEC, Southern California has roughly 1 million BPD refining capacity and the Bay Area has roughly 700,000 BPD capacity.  “A rough per gallon” refined basis is relative to reported capacity not throughput or production.
  2. CARB emissions inventory queries were run for 2012 and the future projection year of 2020 for industrial sources, taking the sum of the Emissions Inventory Categories: 040-Petroleum Refining (Combustion) and 320-Petroleum Refineries.
  3. BAAQMD Emissions Inventory Data for each refinery was transmitted to NRDC via Public Records Request, August 28, 2014 for years 2011 through 2013.

 

 

 

 

 

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