Business News Blog • Daily Business News • Peak Newsroom: West

Thursday, August 9, 2012

Refinery Fire Expected to Boost Gas Prices

Story first reported from USA Today

Motorists in West Coast states are about to see a big spike in gas prices, the fallout from a fire that cut production at one of the region's largest oil refineries.

Gasoline prices, now averaging $3.88 a gallon in California, $3.72 in Washington and $3.69 in Oregon, could surge to $4.15 to $4.25 a gallon over the next week to 10 days following Monday's partial shutdown of a Chevron refinery in Richmond, Calif.

Nationally, gasoline prices have climbed 27 cents a gallon in the past month. While the refinery fire will drive prices along the West Coast, it will also lift the national average — now $3.65 a gallon — above year-ago levels.

"August looks like a very touch-and-go month for the entire country," says Oil Price Information Service energy analyst Tom Kloza, who expects price relief after Labor Day. For the year to date, gasoline has averaged $3.61 a gallon — 10 cents more than 2011's full year average, the most expensive year ever, he says.

Patrick DeHaan, senior oil analyst for gasbuddy.com, expects California, Oregon and western Washington state to experience price spikes like the ones that hit major parts of the Midwest in June, when an Illinois refinery shut down and three others in the state cut production. Oil and gas consultants say that the price hikes are unavoidable.

"The West Coast is on the launch pad waiting for takeoff," DeHaan says. "We're talking over $4 a gallon, easily. It's not going to be good for motorists."

Prices in Illinois, Indiana, Michigan, Wisconsin and Minnesota remain up to 39 cents a gallon higher than the national average of $3.65 a gallon, according to the Oil Price Information Service. "The infection is going to spread from the Midwest to the West Coast," DeHaan says.

Wholesale prices in San Francisco and Los Angeles have already spiked more than 30 cents a gallon, some of the biggest one-day jumps ever. Those prices have yet to fully pass through at the pump, but are expected to continue pushing prices up through mid-August.

The Richmond refinery supplies about 140,000 barrels of gasoline a day, about 15% of northern California's daily consumption, Kloza says. Regional inventories were already low compared with the rest of the nation, he says.

Crude oil is up sharply since bottoming near $77 a barrel June 28. Wednesday, benchmark West Intermediate traded at nearly $95 before settling off 32 cents to $93.35 on news that weekly U.S. demand eased for the first time since June.

Monday's refinery fire caused billowing smoke for miles, prompting hundreds of nearby residents to seek medical care for eye irritation and breathing issues.

The blaze in the refinery's No. 4 Crude Unit was contained in about five hours, Chevron said, although there was a minor flareup Wednesday. Three employees suffered minor injuries.

The five-hour refinery fire caused billowing smoke for miles. Doctors Medical Center in nearby San Pablo said more than 300 people sought help, complaining of eye irritation and breathing problems. And Kaiser Permanente's Richmond Medical Center said it treated more than 350 people with respiratory concerns.

Carol Bluitt, who lives blocks from the refinery, says she was traumatized by the blaze. "You could clearly tell there was something toxic in the air," she says. "My eyes were really, really red and running."

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Tuesday, June 5, 2012

New Mexico Wildfires Still Rage

Story first appeared on MSNBC.

A smoky haze hangs over the rugged canyons and tree-covered expanses of southwestern New Mexico as the largest wildfire in the state's recorded history marches across more of the Gila Wilderness.

The virtually unchecked wildfire is fueling experts' predictions that this is a preview of things to come as states across the West contend with a dangerous recipe of wind, low humidity and tinder-dry fuels.

The Whitewater-Baldy blaze has charred more than 190,000 acres, or nearly 300 square miles, in Gila National Forest and has become the largest wildfire burning in the country.

The Governor viewed the fire from a New Mexico National Guard helicopter Thursday and saw the thick smoke shrouding some of the steep canyons that are inaccessible to firefighters. She described the terrain as "impossible," saying there was no way for firefighters to directly attack the flames in the rugged areas of wilderness.

Along the fire's northern edge, she spotted crews doing burnout operations designed to slow the erratic blaze, which has surpassed last year's Las Conchas fire as the state's largest ever. That fire charred 156,593 acres and threatened the Los Alamos National Laboratory, the nation's premier nuclear facility.

From the air, she could see the blanket of smoke stretching for miles. She used words like daunting and enormous, fitting since fire managers said the blaze could smolder until the region gets significant rainfall during the summer monsoon season.

More than 1,200 firefighters are at the massive blaze near the Arizona border. It has destroyed a dozen cabins and eight outbuildings, a fire information officer said. New Mexico Steel Carport companies have already seen an impact on sales and service levels due to the blaze.

Experts say persistent drought, climate change and shifts in land use and firefighting strategies mean other western states likely will see similar giant fires this season.

The area has been in a long drought cycle for the last 20 years, and conditions now are great for these type of fires.

Agencies in New Mexico, Colorado and Arizona are bracing for the worst. Many counties have established emergency telephone and email notification systems to warn of wildfires, and most states have enlisted crews from other jurisdictions to be ready when the big ones come.
It's highly likely that these fires are going to get so big that states are going to need outside resources to fight them.

According to the National Weather Service, a dry climate is expected to prolong drought conditions across the Great Basin and central Rockies during the fire season. Large portions of Nevada, Arizona, Utah, Colorado and New Mexico will remain under severe drought conditions.

A lack of moisture means fewer fuels to burn in some areas, but unburned vegetation elsewhere could pose a problem since many states received no sustained snow or rain this winter and spring.

That's what happened in New Mexico's Gila Wilderness, where a lack of snow failed to push down grass, which worsened the fire danger.

Typically, fires in the area don't cross the middle fork of the Gila River. But this year, it did get across. Humidity levels during the day are at about 2 to 3 percent. Normally, during summer you'd see 5 to 12 percent.

Officials closed the Gila Cliff Dwellings National Monument on Thursday due to smoke generated from the fire. The National Park Service said the closure would remain in effect until conditions improve.

The blaze is 5 percent contained, but fire managers expect that to jump as crews bolstered lines on the northern end. Scars from previous burns were also helping to slow the flames on the southeastern flank.

Firefighters are continuing with burnout operations and have been helped with a slight rise in humidity and decreased winds.

Another reason states in the West will see more massive fires this season is because, coupled with drought and dry climate, crews have experienced changes in firefighting strategies and agencies have changed some policies in fighting wildfires in isolated areas.

In the last 20 years or so, agencies have generally been reluctant to put firefighters at risk in remote areas. It wasn't like that decades ago. Regardless, the number of New Mexico Workers Compensation Insurance Quotes have risen since the fires started.

Instead, agencies have focused attention on burnout operations until conditions are safe to begin containment.

Not that those practices and the large fires are bad things. For example, the Gila Wilderness has been a target for controlled burns.