The current short-term shortage of gasoline in California makes the following, published by the California Energy Commission, timely:

California’s refineries are located in the San Francisco Bay area, Los Angeles area and the Central Valley. Each day approximately two million barrels (a barrel is equal to 42 U.S. gallons) of petroleum are processed into a variety of products, with gasoline representing about half of the total product volume. (A list of refineries, their location and capacity is avalable online.)

Refineries can be classified as topping, hydroskimming or complex. Topping refineries are the least sophisticated and contain only the atmospheric distillation tower and possibly a vacuum distillation tower.

The topping refiner’s ability to produce finished products depends on the quality of the petroleum being processed.

A hydroskimming refinery has reforming and desulfurization process units in addition to basic topping units. This allows the refiner to increase the octane levels of motor gasoline and reduce the sulfur content of diesel fuel.

Complex refineries are the most sophisticated refinery type and have additional process units to “crack” the heavy gas oils and distillate oils into lighter, more valuable products.

Using a variety of processes including distillation, reforming, hydrocracking, catalytic cracking, coking, alkylation and blending, the refinery produces many different products. The four basic groups are motor gasolines, aviation fuel, distillate fuel and residual fuel. On a statewide average, about 12 percent of the product from California’s refineries is aviation fuel, 13 percent is distillate fuel and 9 percent is residual fuel.

Complex refineries have the highest utilization rate at approximately 95 percent. Utilization rate is the ratio of barrels input to the refinery to the operating capacity of the refinery. Complex refineries are able to produce a greater proportion of light products, such as gasoline, and operate near capacity because of California’s large demand for gasoline.

Permitting Issues.

It is unlikely that new refineries will be built in California. In fact, from 1985 to 1995, 10 California refineries closed, resulting in a 20 percent reduction in refining capacity. Further refinery closures are expected for small refineries with capacities of less than 50,000 barrels per day. The cost of complying with environmental regulations and low product prices will continue to make it difficult to continue operating older, less efficient refineries.

To comply with federal and state regulations, California refiners invested approximately $5.8 billion to upgrade their facilities to produce cleaner fuels, including reformulated gasoline and low-sulfur diesel fuel. These upgrades received permits since low-sulfur diesel fuel regulations went into effect in 1993. Requirements to produce federal reformulated gasoline took effect at the beginning of 1995, and more stringent state requirements for CARB reformulated gasoline went into effect statewide on April 1, 1996. That requirement was removed by Governor Gray Davis when it was found that the oxygenate, methyl tertiary butyl-ether or MTBE, was leaking from some underground storage tanks and polluting water supplies. MTBE was phased out and removed as of December 31, 2003, and replaced by ethanol.