The hopes of gas prices easing rest on how soon Exxon Mobil Corporation (NYSE:XOM) will be able to restore the full capacity. The company’s refinery has produced about 20% of South California’s gasoline and the explosion in February has reduced its operation level to less than 20% of its capacity. As a result, regional gas prices continued to remain higher since there appeared to be no immediate respite from the oil and gas producer.
Inventory Shortage
Exxon Mobil Corporation (NYSE:XOM)’s failure to restore the full production has hurt the gas price since there was shortage in the ongoing inventory of gas. On average, the gas price hit a fresh high of $4.30 in Los Angeles recently. That was 50 cents more than the Stage average and $1.50 compared to the nation’s other region. The worst was that in some of the downtown Los Angeles, the gas prices topped $5 level igniting anger among the consumers.
The company tried to get an approval from the district authorities to use its old pollution control unit that was replaced in 2008 as temporary measures to restore full productions. However, the regulators believe that the Torrance refinery equipment did not detain emissions well enough. Exxon Mobil Corporation (NYSE:XOM) believes that it has plans to compensate the impact of the higher emissions from the old unit.
Biggest Help
California Energy Commission’s fuel specialists said that the biggest help would come only when the company re-starts producing gasoline to full capacity. The specialists said that they were not aware as to exactly where the oil producer stands now. Earlier, analysts expected the company to return to full capacity in the current month itself.
However, there appears to be some bottlenecks since there was damage in the two units of pollution control due to the explosion. The two units have about 1,300 plats to capture fine particulate matter. The company is changing all the plates. Therefore, it might take some more time.
Shayne Heffernan founded the Heffernan Group of Companies.
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The Heffernan Group has become one of Asia’s leading financial services companies with interests in Publishing, Private Equity, Capital Markets, Mining, Retail, Transport and Agriculture that span every continent of the world.
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