Refinery Fire Stokes Fears of Local Gas Price Hikes

Southern California gasoline prices, already topping an average of $4 per gallon, may climb at an even higher rate because of a major fire at a West Coast oil refinery.

The massive Cherry Point refinery near Blaine, Wash., owned by BP Arco, had a major fire Friday night.

A key link called a "crude vacuum distillation unit" was so badly burned that BP experts had yet to approach it to assess damage Monday, according to an incident report filed with the federal government and obtained by the Bellingham Herald newspaper.

Loss of the crude processing unit leaves the refinery unable to take in its daily intake capacity of 230,000 barrels of crude oil, mostly from Alaska.

Gas is refined and blended there to meet California's strict smog laws, and is shipped via tanker ships south to California.

A BP spokesman told the Bellingham newspaper that overall production at Cherry Point may be cut by half for at least the next few days, and possibly the next few months.

The refinery can still produce gas or diesel using semi-refined oil stored on site, or feedstock from other sources.

West Coast refined market traders based in Los Angeles said wholesale futures prices here jumped 7.5 cents per gallon Friday afternoon on news of the Cherry Point fire.

That price had already gone up 33.5 cents per gallon in one month, according to traders quoted by the Reuters business wire.

Wholesale gas prices also shot up all along the West Coast of the U.S. and Canada, as the refinery is virtually on the U.S.-Canadian border and sells fuel to wholesale markets from Vancouver to San Diego.

The bad news for drivers came as Southland gasoline retail prices crossed the $4 mark Saturday. The average gallon of unleaded went for $4.07 Monday in Los Angeles County, 51.4 cents greater than a year ago, according to figures from the AAA and Oil Price Information Service.