Oil and Gas

Refinery trouble will keep CA gas prices higher

Oil rigs just south of town extract crude in Taft, California.
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Water isn't the only liquid that's not flowing in Southern California.

Low production at a single Exxon Mobil refinery in Southern California is keeping gasoline prices higher than they are in many other parts of the United States, where a domestic oil boom has driven prices lower over the last year, according to an article in the Los Angeles Times.

The refinery's owners have been working to increase production at the facility since it was damaged by an explosion in February, but have been at odds with regulators over the installation of a pollution control system, and possibly other issues.

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Exxon Mobil executives had proposed using an old pollution control device until the refinery could install a new one that meets air quality standards. That plan has been scrapped after regulators refused to consider it until Exxon Mobil responds to certain requirements that have not been not publicly released.

The federal Occupational Safety and Hazard Administration cited the company in mid-August for several violations related to the February explosion, some of which the agency called "willful," the article said. The agency also fined the company more than $500,000.

Exxon Mobil officials told the Los Angeles Times the "company has been working with all agencies and will continue to work with the air quality regulators."

The plant supplies one fifth of Southern California's gasoline, according to the Times.

Gasoline prices in the Los Angeles area were around $3.19, compared with the nationwide average of $2.28.

Shares of other West Coast refiners were higher Wednesday following word that the Exxon Mobil refinery would remain closed into next year. Those stocks included Tesoro, Western Refining, Valero Energy and Marathon Petroleum.

U.S. crude oil (WTI) was trading around $45.90 on Wednesday, and Brent crude trading at about $48.80.