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Refinery fire could slow entire California economy, expert says

August 8, 2012 |  9:11 am


The lumbering California economy could be slowed by a prolonged shutdown of the huge Chevron Corp. refinery in Richmond, which provides a sizable chunk of the state’s fuel-making capability, a UCLA expert said.

Gasoline prices in California could surge as much as 35 cents a gallon, taking the edge off the state’s modest growth rate now estimated to be roughly 2%, said William Yu, an economist with the UCLA Anderson Forecast.

"Consumers will have to bear the burden of higher fuel costs," Yu said. "They will have to cut back on other kinds of consumption to maintain their budgets.”

PHOTOS: Richmond refinery fire

Yu said a lengthy shutdown of the refinery could knock half a percentage point off the growth rate of the state’s economy.

The impact on gasoline prices was nearly immediate in some places. Wholesale fuel traders drove up spot prices more than 30 cents a gallon, though most gas stations don't pay the spot price, instead getting their fuel under long-term contracts.

The spot price, however, is a strong indicator of where retail prices are headed.

The Chevron refinery fire, which began Monday afternoon, sent up a column of odorous black smoke that could be seen for miles. Nearby residents were told to seek shelter indoors.

By Tuesday evening, more than 900 people had shown up at area emergency rooms complaining about respiratory and other problems.

Chevron officials said they were still evaluating damage at the 110-year-old plant, which processes 243,000 barrels of oil a day into gasoline, diesel and jet fuel, accounting for about 15% of the state's fuel-making capacity.

At an emotional town hall meeting Tuesday evening, several hundred people -- many holding protest signs, some with face masks and one in a full biohazard suit complete with gas mask -- turned out to vent their frustration.

They booed refinery General Manager Nigel Hearne when he again apologized for Monday's incident. They shouted down Randall Sawyer, Contra Costa County director of hazardous materials. And they heckled Katherine Hearn of the county’s Community Awareness and Emergency Response Department, who tried to talk about the region’s warning system.

“It didn’t work in my neighborhood,” one woman yelled out.

Dr. Henry Clark, executive director of the West County Toxics Coalition, said “This warning system has not worked from Day 1. There’s always been the wrong people getting the warning, not enough people getting the warning.”

Hearn said that the first notifications go to the media and that the emergency broadcast system is activated. After that, she said, there are sirens and telephone calls, and other alerts.

Richmond resident Bruce Atkin, 55, said he had only two questions, which seemed to encompass the tensions facing many in this hard-knock city.

“When we go to the doctor, who’s gonna pay the bill? I don’t got no money,” Atkin told the panel.

Then he addressed the crowd: “You all talk about Chevron getting out of Richmond. Do you want to see a ghost town? … There will be no work, no money, no nothing. Stop being mad and start thinking outside the box.”

Hearne, the refinery general manager, promised that the company would stand behind its long history here. And the bills? “Chevron will take responsibility for all legitimate claims that come in,” he said.


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Chevron refinery fire in Richmond may spur jump in gas prices

-- Maria L. LaGanga and Ronald D. White

Photo: Residents watch as the Chevron refinery in Richmond, Calif., burns. Credit: San Francisco Chronicle