- The Washington Times - Tuesday, February 12, 2008

Washington-area gas prices are likely to increase as the result of the temporary shutdown of a major refinery in Delaware, analysts said yesterday.

A power failure late Sunday at Valero Energy Corp.’s Delaware City location caused crude oil futures to jump to a one-month high yesterday.

The Delaware City refinery can process 190,200 barrels of oil a day, according to U.S. Energy Department data.

Gas prices are hovering around $3 in the Washington area, far above last year’s average of $2.18, according to AAA.

“Gas prices are already inflated, and the refinery shutdown at Valero will exacerbate those prices,” said John Townsend, a spokesman for AAA Mid-Atlantic.

Valero, the biggest U.S. refiner, said it managed to restart its Delaware City plant yesterday, just as the region prepared for the coldest stretch of weather so far this winter.

Washington-area temperatures were expected to plunge into the teens last night, about 10 degrees below normal, the National Weather Service said.

“Temperatures have been very moderate so far this winter,” said Brad Samples, commodity analyst for Summit Energy Inc. in Louisville, Ky. “We’ve been lucky because heating-oil stocks were low at the start of the season. With all of the refinery utilization occurring, we can expect to see further inventory drops.”

Heating oil for March delivery rose 5.03 cents, or 2 percent, to $2.6044 a gallon in New York, the highest close since Jan. 9. Gasoline for March delivery climbed 3.9 cents, or 1.7 percent, to $2.3962 a gallon, the highest close since Jan. 9.

Crude oil for March delivery rose $1.82, or 2 percent, to settle at $93.59 a barrel, the highest close since Jan. 14. Futures are down 6.5 percent since touching a record $100 a barrel Jan. 3.

“The Valero story is heightening nervousness about the refining industry,” said Nauman Barakat, senior vice president of global energy futures at Macquarie Futures USA. “The big worry is that there will be a slew of problems as we prepare for the driving season this spring.”

This article is based in part on wire service reports.

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