On Thursday night around 9 p.m., a fire broke out at the Chevron Refinery located in El Segundo, a city south of Los Angeles, which is the second-largest oil refinery in California. It took until early morning the next day at 7 a.m. to mostly contain the fire.
Although there were no casualties, the refinery is expected to halt production for at least a week. Following the news, gasoline futures and crude oil prices rose slightly on Friday morning on the East Coast. Residents in Southern California and industry experts are concerned that the incident may lead to a spike in gasoline and aviation fuel prices.
The El Segundo Refinery, built in 1911, has a rated production capacity of 290,000 barrels per day, primarily supplying gasoline, aviation fuel, and diesel to the Southern California market. The fuels it provides account for 20% of the local market for motor vehicle fuel and 40% for aviation fuel. Currently, most of the facility has suspended production.
Historically, major refinery fires tend to cause wholesale gasoline prices to rise. If the shutdown lasts for several weeks, prices could increase further. While imported gasoline can help alleviate demand, it typically takes weeks or even longer to adjust.
Severin Borenstein, director of the Energy Institute at the Haas School of Business at the University of California, Berkeley, and an economist, told the Los Angeles Times that if gasoline inventories in the state are limited, a significant rise in oil prices could be seen. Additionally, many refineries in California are currently undergoing maintenance, exacerbating supply constraints.
Patrick De Haan, an oil analyst at GasBuddy, posted on X-platform on the afternoon of the 2nd, stating that the impact of the fire on gasoline prices is low to moderate, primarily limited to Southern California for now.
By Friday afternoon, he estimated that gasoline prices could increase by 10 to 35 cents per gallon, with the largest surge potentially starting from this Saturday until next Monday; while aviation fuel prices could sharply rise.
According to AAA price data, regular gasoline in the Los Angeles-Long Beach area was $4.718 per gallon on Friday, slightly lower than the previous day’s price of $4.723. Diesel remained unchanged at $5.17 per gallon.
De Haan believes that the impact of the fire on gasoline prices outside the West Coast is minimal, but it could still pose a serious issue, potentially affecting several months or longer. This will depend on the damage report from the refinery coming out to ascertain.
Two sources told Reuters that the fire occurred at Isomax 7, responsible for converting middle distillate fuel oil into aviation fuel at the refinery. According to De Haan, two critical units for refining crude oil — the Fluid Catalytic Cracking Unit (FCC) and Crude Distillation Unit (CDU) — were not affected by the incident.
On the day of the fire, Governor Newsom had just signed the AB30 bill, allowing the sale of E15 fuel (gasoline blended with 15% ethanol) in California. Current studies suggest this blend could reduce gasoline prices by $0.20 per gallon, saving California residents $2.7 billion annually.
According to ABC7, on Thursday evening, flames billowed into the sky at the Chevron Refinery in El Segundo, visible miles away. Witnesses described hearing a loud “roar” before seeing a bright light appear, followed by a wave of heat, resembling a small earthquake.
Numerous images on social media showed thick smoke billowing over the refinery, causing anxiety among nearby residents, with some busy moving vehicles. Authorities briefly asked residents in certain areas to stay indoors.
A large number of fire trucks rushed to the scene to extinguish the flames. By early Friday morning, El Segundo officials announced that the fire was under control, with no threat to public safety, and all closed roads had been reopened.
The cause of the fire is still under investigation. The Governor’s office and Mayor Garcetti have been closely monitoring the situation. The Governor’s office is actively coordinating to ensure the safety of surrounding communities and public safety.