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Refinery Fire Bumps Price

Posted on: Thursday, 25 August 2005, 21:00 CDT

Aug. 26--A fire at a gasoline-producing unit at Tesoro Corp.'s biggest refinery spooked oil traders Thursday and may contribute to higher prices at the pump over the Labor Day weekend, oil experts said Thursday.

No one was injured in the fire, which occurred in the plant's fluid catalytic cracking unit that produces gasoline. The Golden Eagle refinery, about 35 miles northwest of San Francisco, has the capacity to process 168,000 barrels per day.

San Antonio-based Tesoro is investigating the fire and it isn't yet known how long the unit will be down, Tesoro spokeswoman Sarah Simpson said. "Hopefully tomorrow we'll know more," Simpson said. The unit that's shut down can produce about 66,500 barrels of gasoline a day.

"It's a tough break for Tesoro," said Tom Kloza, chief oil analyst at the Oil Price Information Service, based in Wall, N.J.

"If you wanted to pick a terrible time for a unit to be down, this is it, because it's a tremendous opportunity lost for the days that it will be down," Kloza said. "It's like an ice cream truck breaking down on the hottest day of the year at the beach." Tesoro's stock fell more than 2 percent Thursday, dropping $1.15 a share to close at $51.63 in trading on the New York Stock Exchange.

Kloza said Tesoro's refinery fire "led spot prices to go a little bit nutty" Thursday. "All the gas markets are white-hot," Kloza said. "That means worry and higher prices." U.S. benchmark crude contracts for October reached a record Thursday, closing at $67.49 a barrel in trading on the New York Mercantile Exchange.

AAA, in its weekend driving report issued Thursday, said Texas' per-gallon average gas price was $2.555 a gallon, up from $2.536 a gallon a week ago. San Antonio's average rose about a penny, to $2.476, up from $2.464 a week ago.

Traders cited refinery problems such as the Golden Eagle fire and worries that Hurricane Katrina could interfere with production in the Gulf of Mexico.

The fire at the Tesoro plant is the latest in a rash of incidents that have plagued the U.S. refining industry. At least 20 accidents or stoppages have occurred at refineries in the past month, industry experts say, as rising demand for gasoline has meant plants are running at 93.4 percent capacity.

The most serious accident in more than a decade occurred March 23, when an explosion at BP's Texas City refinery killed 15 workers and injured 170.

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TSO, BP,

Source: San Antonio Express-News

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