U.S. Deserves Candor, Transparency From Refineries

Much of the gas price volatility in 2012 was caused by problems at refineries.

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Gregg Laskoski is a senior petroleum analyst for GasBuddy.com

In GasBuddy's  '2012: Year in Review' we noted that virtually all of the retail gasoline price volatility that Americans experienced this past year was connected to significant problems at refineries. And it was those refineries' vulnerability that subjected U.S. consumers to the year's highest average price ever, $3.63 per gallon.

February delivered the BP refinery fire in Cherry Point, Wash., and that led to gasoline price spikes all along the Pacific coast. The spring of 2012 brought refinery problems in the Great Lakes region that pushed Chicago gas prices to an all-time high of $4.56 per gallon. Over the summer, west coast refineries incurred outages, and California saw record highs in most markets, with Los Angeles gasoline's average price peaking at $4.72/gallon in October.

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Most recently we saw the refinery problems in New Jersey caused by flooding from Hurricane Sandy and resulting power outages that led to severe fuel shortages in the northeast, mile-long lines for motorists, and chaos in the New York/New Jersey metro area. Sandy effectively shut down the Phillips 66 Bayway, New Jersey refinery taking off-line the east coast's second largest refinery with a capacity of 238,000 barrels per day.

On November 5, Reuters reported that some 7,700 gallons of fuel spilled from Phillips 66's Bayway refinery in Linden, N.J., after Hurricane Sandy, and it was the second leak there.

The spill was reported after residents in nearby Bayonne had complained about diesel fumes. New Jersey environmental protection officials said they were not made aware of a major spill at the Bayway plant, however, and the refinery failed to respond to inquiries from Reuters reporters.   

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Too many times, history has shown us, the Phillips 66 response or lack thereof characterizes the standard practice of  the oil industry. Refineries often fail or are slow to communicate problems that create significant disruptions to fuel supplies and spikes in retail gasoline prices. More often than not, scant information is provided reluctantly, if at all.

When gasoline supplies are compromised that means the local, regional, and/or national economy is impacted. One could also argue that the risk to public safety increases significantly when fuel shortages occur, something that police throughout the New York metro area, no doubt, would readily confirm.  

When such things occur is silence from refineries acceptable?  Or does our government and the electorate who put them there have a right to know what's really going on?  

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