A fire at a Valero refinery in the Bay Area could cause gas price spikes and possible shortages across California.
"Preliminary comments indicate that the fire might have been in the fluid cat cracker, which is where gasoline is made and manufactured," Oil industry analyst Tom Kloza told KNX News.
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He said if the initial report is accurate, it would be a serious issue as California has shut down several refineries recently, making the state even more reliant on imported gasoline.
"You had a couple of closures in 2020 after COVID, where refineries shut down traditional operations," Kloza said. "They're making renewable fuels... Then you've got the notice that Valero is gonna close this refinery in the Bay Area around April of 2026, and that's pretty foreboding."
He said that the Martinez refinery operated by PBF had a fire explosion and is still recovering, "so really, you've got Chevron running, and that's about it in Northern California at the moment."
Meanwhile, Phillips 66's 140,000 barrels-a-day refinery in Los Angeles is set to close by the end of the year, which, according to Kloza, will leave the state generating less than half of what it was in 2019.
Kloza said that with California's refining capacity so diminished, there is no room for error. If the Valero refinery is out of commission for an extended period, well before its intended closure date, we could see shortages or extreme price spikes.
"It's gonna seem like a crazy prediction, but there's a possibility in this driving season, you might have to pay $6 or $7 a gallon for California gasoline, whereas in other states, it might be $2 to $2.50," Kloza said.
Refineries in Washington are starting to make California's cleaner-burning gas, but Kloza says that won't help much - at least not yet.
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