Flyers were placed on nearly every door within a mile radius of the ExxonMobil refinery notifying residents of the impending restart of the facility. Thursday, May 5, 2016, Torrance, CA. (Steve McCrank/Staff Photographer)
By Nick Green, Daily Breeze
Posted: 05/05/16 – 8:40 PM PDT |
The February 2015 explosion that shuttered the ExxonMobil plant in Torrance was the costliest disruption at a California refinery in the past 16 years, with motorists paying at least $2.4 billion in higher pump prices in the following six months, according to a recent RAND study.
Soaring prices stemming from the lost gasoline supply sucked a staggering $6.9 billion from the California economy in the first six months after the explosion alone.
But the total economic loss is likely more than double that figure, RAND researchers noted.
Fifteen months after the blast in a pollution-control device, ExxonMobil this weekend is scheduled to begin restarting the refinery, which normally produces 155,000 barrels of gasoline a day, or about 10 percent of the total refined product in California.
The economic losses tied to the Torrance blast were part of a larger RAND cost-benefit analysis of proposed California oil and gas refinery safety regulations.
Those recommendations were made by a state task force in the wake of the 2012 fire at the Chevron refinery in Richmond that forced 15,000 people to seek medical treatment. The RAND study was sponsored by the state as part of a mandatory regulatory assessment conducted when proposed regulations have an economic impact exceeding $50 million.
The 125-page report, issued in March, concluded that stricter regulations are a cost-effective method to increase safety at the state’s dozen refineries and reduce the number of major incidents that cause price spikes at the pump and other economic losses.
“The new process safety management regulations could improve safety at California refineries, which would, in turn, result in fewer major process incidents and fewer releases of hazardous materials from refineries,” the study said.
“Because the number of major refinery incidents might decline under the proposed regulations, the regulations could provide safety and health benefits to the public in nearby communities and might provide other economic benefits,” the report added.
A U.S. Chemical Safety Board report on the Torrance explosion, released earlier this year, noted that 333,000 residents, 71 schools and eight hospitals are within a three-mile radius of the refinery.
The February blast, which state and federal investigators have blamed on ExxonMobil’s deliberate failure to fix equipment, almost caused a catastrophic release of highly toxic hydrofluoric acid that could have killed or injured thousands, CSB investigators said.
The study by the nonprofit Santa Monica think tank also found that as consumers shelled out more money in the wake of the Torrance plant shutdown, California refiners were benefiting financially from the disruption.
On average, a major refinery accident costs refiners in the state an average of $220 million, the report said.
“The supply shortage that the ExxonMobil Torrance Refinery incident caused resulted in a price increase of about 40 cents a gallon in the state,” the study concluded. “This resulted in a windfall profit on the order of $2.4 billion to the refiners that maintained or increased production at this time.
“Thus, although the losses to the refiner having the incident were significant, the gains for the rest of the industry were more than four times as great as those losses,” the report added.
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