Refinery Fire Drives Up Gas Prices In Arizona, Highlighting California Reliance

By Kenneth Schrupp

A fire at one Northern California refinery responsible for 10% of the state’s gasoline production has resulted in higher gas prices in California, Arizona and Nevada, highlighting the latter states’ reliance on aging California refineries.

Last week, the Martinez Refining Co.’s facility caught fire as workers prepared for planned maintenance during the winter season, when demand for fuel is lowest.

According to the oil industry, California regulations are responsible for the state’s gasoline supply declining rapidly as demand remains strong, creating supply imbalances and price shocks when refineries go down or shut down.

“The state’s intended goal is to put our industry out of business through legislation, regulation, policies and political initiatives, even though more than 98% of registered vehicles run on traditional liquid fuels, from Crescent City in the north to San Diego,” said Western States Petroleum Association spokesperson Denise Davis to The Center Square. “As a result of the state’s initiatives, we have also seen a significant decline in oil production in addition to the decrease in the number of refineries in California, while demand for fuels has remained steady.”

“The supply-demand imbalance will only get worse, and this will impact California consumers as well as motorists in Arizona and Nevada, because both states rely on California refineries for the bulk of their fuel,” continued Davis.

While the fire was quickly contained, having a plant responsible for so much gasoline production has resulted in major gasoline price increases not just in California, but for the parts of Arizona and Nevada dependent on California gasoline.

According to AAA, the national price average for a gallon of regular octane gas rose in the past week from $3.11 to $3.14. Across California as a whole, prices rose from $4.46 to $4.55, with San Francisco prices rising from $4.61 to $4.71 and Los Angeles prices increasing from $4.51 to $4.61.

In Arizona as a whole, prices rose from $3.25 to $3.27, in line with the national increase, while in Maricopa County, which is required to use California gasoline to combat smog, gas prices increased significantly faster, with Scottsdale prices rising from $3.42 to $3.47.

In Nevada as a whole, prices rose from $3.68 to $3.73, with prices in Las Vegas rising from $3.70 to $3.76, and Reno prices rising from $3.88 to $3.89.

Because Reno imports gasoline via pipelines from Northern California, while Las Vegas imports gasoline from both Southern California and Utah, it’s unclear why Reno prices have barely moved compared to Las Vegas prices, especially given Reno’s relative dependence on heavily impacted Northern California.