Chevron El Segundo Refinery Fire: What Happened and Its Impact on SoCal Gas Prices

A significant fire erupted at the Chevron refinery in El Segundo on Thursday night following an explosion, raising immediate concerns about a surge in Southern California gas prices. While the blaze produced a massive fireball, initial assessments by Friday morning suggested minimal damage to the sprawling 1,000-acre complex, though some flames were still visible.

The incident, which damaged a jet fuel production unit, has experts closely watching the refinery’s operational status. The El Segundo facility, established in 1911, is a critical supplier, producing approximately one-fifth of all motor vehicle fuels and 40% of the jet fuel consumed in Southern California. This region already grapples with tight supplies due to limited in-state refinery capacity and a reliance on hundreds of thousands of barrels of imported gasoline daily.

Economists, including Severin Borenstein from UC Berkeley’s Haas School of Business, note that while the full disruption to gasoline production is yet to be determined, such fires typically cause wholesale spot prices to spike, with effects felt at the pumps within days. A prolonged shutdown could lead to substantial price increases, although imports and existing storage could help mitigate the impact over time. The fire occurs at a challenging time, with many California refineries already scheduled for maintenance.

Union officials confirmed the fire originated in the refinery’s Isomax complex, which is vital for converting gas oil into higher-value products like jet fuel. Historical data, such as the 2015 Exxon Torrance refinery explosion, illustrate that refinery disruptions can cause significant and lengthy gas price spikes, depending on the duration of the outage.

Southern California gas prices were already trending upwards, with the Los Angeles-Long Beach area averaging $4.718 per gallon for regular gas, an increase from previous months and a year ago. The Chevron incident further complicates a regional refining landscape already undergoing changes, including the winding down of the Phillips 66 complex and the announced closure of Valero’s Bay Area refinery, which collectively account for a substantial portion of the state’s refining capacity.

This event also unfolds amidst recent legislative actions by Governor Gavin Newsom, including efforts to allow up to 2,000 new oil wells per year in Kern County and a bill permitting the sale of cheaper E15 gasoline, aimed at potentially lowering pump prices for Californians. Nationally, the average price for a gallon of regular gas stands at $3.152.

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