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California’s “Crude Awakening”

A terrible fire at a Chevron refinery in California reminds us that oil can still be a very dangerous beast. We can be thankful that no one was killed and that there were no serious injuries as well. From an op-ed in the San Francisco Chronicle:

Every day thousands of employees and contractors come through the gates of Chevron’s Richmond refinery. We are deeply proud of the work we do to produce gasoline, diesel, jet fuel and other products that are essential for millions of Californians.

We are committed to operating safely and reliably. In the past 10 years, we have significantly reduced recordable injuries through improvements to how we make our products and to personal safety. In the past year, we logged nearly 2.8 million continuous hours without injury, our safest year ever.

Unfortunately, an accident occurred Monday. It sent smoke throughout the northeast bay and caused people to shelter in place. We continue to take full responsibility and offer our most sincere apologies.

The Bay Area Air Quality Management District said in a statement on its website, “The results of our lab analysis of air samples from the Chevron fire show levels of these potentially toxic pollutants to be well under their reference exposure levels … and not a significant health concern.” There was no loss of life from the incident and no serious injuries to our employees.

Now we are working to make things right.

Unfortunately, Californians and those in nearby states were likely hit by a massive run-up in gasoline prices — around 30-35 cents according to some analysts — as the Chevron refinery in California produced almost 250,000 gallons of gasoline on a daily basis, which was obviously halted after the fire.

There aren’t many oil refineries in the United States, for many reasons, one being that its incredibly difficult to navigate through the court challenges and regulations. This isn’t a problem in good times, but when accidents happen like the fire mentioned above, or weather damages like what we saw from Hurricane Katrina, some refiners are forced to shut down and others are unable to rapidly increase production to match the temporary shortfall.

Thankfully, despite the fact that no new refineries have been built in the United States since 1976, we have a few new refineries that are being built:

However there is some good news. Two new oil refineries are being developed in the United States: Arizona Clean Fuels Yuma, LLC is building an oil refinery in Yuma, Arizona and Hyperion Energy Center is building a refinery in Union County, South Dakota.

 Currently there are 149 refineries in the US. The last time a new oil refinery came online was 1976.

 I don’t know about you, but knowing that two refineries are in development is great news. It gives me renewed hope  that someone is willing to fight extremely overbearing government regulations and hostile environmentalism to bring America something it needs. (I know these companies stand to make billions and billions and why shouldn’t they? They are taking the risks and that’s American capitalism).

 Which refinery will actually become operational first appears to be a matter of who can jump through the hoops the quickest. Arizona Clean Fuels was originally scheduled to open in 2009. But it took SEVEN YEARS TO GET AN AIR QUALITY PERMIT.

More refineries means more refinery capacity, allowing more leeway during hard times. As the post above indicates, these refineries have navigated through most but not all of the regulations needed. Let’s hope they are successful.

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