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Study says Torrance refinery explosion cost California drivers $2.4 billion.

05 May 2016

The February 2015 explosion that closed the ExxonMobil refinery in Torrance, California, cost drivers in the state at least $2.4 billion in higher fuel prices over the following six months, according to a study by the RAND think tank reported by the Daily Breeze.

Stock image
Stock image

The report also estimated the incident had sucked $6.9 billion out of 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 said.

The figures were part of a larger RAND cost-benefit analysis of proposed California oil and gas refinery safety regulations. 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 RAND study estimated that the economic loss from a major refinery incident — just three have occurred in California in the past 16 years — averaged $800 million a year. Meanwhile, the cost of implementing the regulations is likely about $58 million a year.

A US 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 refinery is due to reopen on May 7, some fifteen months after the blast. It produces 155,000 barrels of fuel a day, or about 10% of the total refined product in California.

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