Sen. Boxer, Shell Clash on Closing Date for Refinery in Bakersfield

Sen. Barbara Boxer accused Shell Oil Co. on Tuesday of accelerating plans to shut down its Bakersfield refinery despite growing concerns that the closure would boost prices and irreversibly shrink the state’s fuel supplies.

“My information is that Shell is planning to begin the shutdown process as early as August by taking production units off line,� Boxer wrote in a May 18 letter to Lynn Laverty Elsenhans, chief executive of Shell Oil Products, the Houston-based refining subsidiary of Shell Oil. “To take refinery units off line in August, when summer gas prices are at the peak, will only worsen the problem of insufficient supply.�

Any production cutback in August, no matter how small, would further strain the state’s fuel supply heading into the Sept. 4 Labor Day weekend, the state’s second-biggest driving holiday behind Memorial Day weekend.

A Shell spokesman denied Boxer’s claim Tuesday.

“The stuff about us shutting down in August is not accurate,� said David Harrington. “Sometime after Labor Day, we will begin to slow production so that we can close the place on the 30th� of September.

Boxer, however, was undeterred by the company’s rebuttal. The California Democrat said she planned to raise the issue with Elsenhans today during a prearranged conference call.

“What is evident is that they’re rushing this closure. They want to take supply off the market,� Boxer said in an interview. “We want them to acknowledge a little bit of responsibility ... to slow this closure down because they’re making money on this deal, and it’s really going to hurt consumers.�

The company disclosed plans in November to close the Bakersfield refinery by Oct. 1. The relatively small refinery processes up to 70,000 barrels a day of crude oil, and makes 2% of California’s gasoline and 6% of its diesel, according to Shell.

Experts immediately warned that the refinery’s closure would worsen the state’s already precarious balance between the amount of gasoline and diesel produced each day in California, and the rising demand from motorists, truckers and industry.

As retail gasoline and diesel prices soared -- the statewide averages are up 42% for gasoline and 40% for diesel in the last five months -- politicians and others have grown increasingly concerned. Boxer, California Atty. Gen. Bill Lockyer and others have repeatedly questioned Shell’s rationale for closing a profitable refinery in the nation’s most lucrative fuel market.

Closing the Bakersfield plant, they argue, would send fuel prices higher throughout the state and boost profit at Shell refineries in Wilmington and Martinez. Shell has said it is closing the Bakersfield facility because “there is simply no longer an adequate supply of crude oil to justify the continued operation� of the refinery.

Internal Shell operations reports, however, show that the Bakersfield refinery remains profitable and recently out-performed Shell’s other U.S. refineries in many respects.