California dock fire may pressure already high gasoline prices

A four-alarm fire over the weekend at a San Francisco-area dock could force Valero Energy Corp.’s Benicia refinery to cut fuel production, potentially pushing local gasoline prices higher. 

Valero had been storing a coal-like byproduct from refining called petroleum coke in a silo near the dock before exporting it. Refineries have coke pits but, when they fill up they have to get rid of it or face cutting production or even shutting down. 

California drivers are already paying $5.748 a gallon for regular gasoline, compared to a national average of $4.098, according to auto club AAA. Valero’s Benicia refinery can make more than 75,000 barrels a day of gasoline so any unplanned supply disruption could pressure prices higher.

If the refinery “is unable to export pet coke they won’t have a place to store a lot of this stuff, and they would have to shut down,” said Robert Campbell, head of oil products research at London-based consultancy Energy Aspects. “Asia is not exporting gasoline right now and it would be hard to get supplies in.” 

Switching to trucks to haul off the pet coke may not be easy or even an option. The coker can make 800 to 1,000 tons of coke a day, an amount that would fill up 20-30 trucks.

The crude and automobile unloading sections of the dock could be operational in days, but not the pet coke terminal, Benicia deputy city manager Mario Giuliani, said by phone. The company is working on contingencies for dealing with the coke but hasn’t shared them with the city, he said. 

Valero didn’t immediately respond to a request for comment. In 2016, Benicia’s planning commission rejected a plan by Valero to build a rail loading terminal at its facility, hindering potential access to North American crude oil while also limiting ways to ship products like pet coke from the refinery.

The dock fire broke out Saturday at 12:20 p.m. near the Amports terminal at the base of a silo used to store pet coke. The fire then traveled along a conveyor belt to the dock, where it began burning along the underside of the pier.