On August 6, a fire tore through Chevron’s Richmond refinery. The Richmond refinery is located in Northern California, a few miles outside of San Francisco, and is the third
Gasoline prices at the pump also rose after the fire. One week after the fire, average retail prices for regular reformulated gasoline in and around San Francisco were up about 28 cents per gallon. Even now, three weeks after the fire, average retail prices in the San Francisco area continue to be up by about 28 cents per gallon.
Senator Dianne Feinstein (D-Calif) recently sent a letter to the Federal Trade Commission calling for an investigation into potential market manipulation in the aftermath of the fire. I am not convinced market manipulation is the explanation for the higher prices we’re seeing. My close look at publicly available data suggests the price movements are more consistent with the fundamentals of supply and demand than market manipulation:
While wholesale prices in California rose quickly relative to prices in the rest of the