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Effects of Refinery Project on Barrel Prices

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Published on : Sep 18, 2014

According to the electronic newsletter issued by the California Independent Petroleum Association on Monday, the refinery project poses major economic questions regarding bringing extra crude barrels into the California market. This will affect the local crude prices in the state. 

The oil-by-rail project of Alon USA Energy Inc. on Rosedale Highway stirs several questions regarding the local crude prices in the oil industry of California. 

Alon is a Dallas-based oil company that has asserted around $170 million since 2012 in the refining industry. Several observers in this industry say that Alon’s proposal could possibly lower the price of Kern County oil that is capable of bringing in about 150,000 barrels per day of oil from North Dakota and similar places. 

Industry specialists said lower prices and large volumes could make the local crude prices less striking to California refiners.  

The department of Kern’s County Planning and Community Development has agreed to meet and discuss the Alon project and the economic issue encompassing it. 

The project had won a unanimous approval by the county Board of Supervisors last week, said CIPA’s newsletter. Lorelei Oviatt, the County Planning Director said oil companies do not mention about the price issue at the official review period during a project. She refused to have any meetings regarding this project; however said she would entertain members of the oil industry or public to approach her.

According to Rock Zierman, CIPA CEO and President, the meeting that took place was general in nature and the trade group has no definite position on the project. 

Alon’s project would involve an upgrade of 70,000-barrel-per-day refinery that will process several kinds of oil. The project will open in the second half of the year 2016. 

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