California Gasoline Markets Adjust to Torrance Refinery Outage

Strategic Insights -

Following an explosion at the ExxonMobil refinery in Torrance, California, on February 18, the region's gasoline markets have undergone significant changes. California's typical low gasoline imports have increased dramatically, with imports averaging 10 times their usual level over the five months following the explosion. This sudden surge in imports has led to higher wholesale and retail prices in California, with the state's retail gasoline prices averaging 76o/gal and 90o/gal higher than the U.S. average in July.

Key Takeaways:

  • Over a five-month period following the Torrance refinery explosion, California gasoline imports increased to more than 10 times their typical level, averaging 52,000 barrels per day.
  • The primary import sources have been refineries in India and the United Kingdom, accounting for 13,000 b/d and 11,000 b/d, respectively, from March to July.
  • Imported gasoline has been arriving in Southern California ports, with more than 50% of volumes classified as "all other motor gasoline blending components."
  • Wholesale spot California grade gasoline prices in Los Angeles have averaged $2.17 per gallon, with a premium of 38o/gal compared to the front-month futures contract of reformulated blendstock for oxygenate blending (RBOB).
  • California retail gasoline prices are typically higher than the U.S. average due to higher taxes and differences in gasoline specifications, averaging 76o/gal and 90o/gal higher than the U.S. average in July.
  • The Torrance refinery outage has also led to a significant increase in gasoline imports from Russia, averaging 5,600 b/d from March to July.

Statistics:

  • 52,000 b/d: Average California gasoline imports from March to July
  • 13,000 b/d: Average imports from Indian refineries from March to July
  • 11,000 b/d: Average imports from UK refineries from March to July
  • 5,600 b/d: Average imports from Russian refineries from March to July
  • $2.17/gal: Average wholesale spot California grade gasoline prices in Los Angeles
  • 38o/gal: Premium of wholesale spot California grade gasoline prices compared to RBOB
  • 76o/gal: Average increase in California retail gasoline prices compared to the U.S. average in July
  • 90o/gal: Average increase in Los Angeles retail gasoline prices compared to the U.S. average in July

Sources:

  • U.S. Energy Information Administration
  • U.S. Energy Information Administration PADD 5 Transportation Fuels Markets study
  • T. Mason Hamilton, Principal contributor