As California motorists struggle with $4+ gasoline following the recent Chevron refinery fire in Richmond, CA, they'll learn that one company is moving to gain refinery capacity and retail marketing presence there. Tesoro announced today that it is buying the BP refinery in Carson, along with 800 dealer-operated gas stations in California, Arizona and Nevada for $2.5 billion.
For Tesoro and BP it's two companies moving in opposite directions. But what does it mean for consumers? Arco gas stations have earned a reputation for competitive gasoline prices and they have a certain brand loyalty among consumers who say they favor these gas station / convenience stores. Will that change?
It's too soon to tell. According to Benjamin Haas of Bloomberg Business News, Tesoro was selling unbranded California-blend gasoline in the San Francisco region for $3.40 per gallon on Aug. 10, up 13 percent from its price before the Chevron fire.
With the purchase of the BP refinery in Carson, CA Tesoro will control 27 percent of California's refining capacity, Bloomberg reports.
The Carson refinery, south of Los Angeles has refining capacity of 266,000 barrels per day and is nearby Tesoro's Wilmington refinery (97,000 bpd) and is reportedly among the top quartile of refineries in the U.S. for utilization and energy efficiency.
Combined with Tesoro's current west coast infrastructure, the acquisition is expected to drive significant operational synergies through the integrated supply of crude oil, enhanced optimization of feedstocks and product distribution.
The transaction also includes a majority share of ownership in the 400 megawatt gas-supplied Watson cogeneration facility. This co-gen facility, the largest in California, provides reliable electricity to the Carson refinery and sells electricity to the local utility grid.
Tesoro CEO Greg Goff says "Tesoro understands the complexities and challenges of operating in California and is well positioned to generate significant operational efficiencies and increase our ability to satisfy market demand." ...We'll see!