Today, a mylar balloon downed Exxon/Mobil's Torrance refinery, which supplies 8% of California's gasoline. On May 9, Exxon announced that it was shutting its refinery down for "planned maintenance." In the next four days, Southern California gasoline prices soared 8¢. The current shutdown, which sounds more like an aborted restart, is likely to cause more jumps at the pump this weekend as fuel buyers scramble for supplies. According to our sources, the mylar balloon caused a short in a powerline that feeds the refinery, shutting off electricity and forcing a complete shutdown.
Wholesale fuel prices have been steadily dropping, signalling what appeared to be an inevitable decline below the $4 a gallon mark in June. It doesn't matter if this outage actually causes a shortage in fuel supplies; what matters is that there is a perception of shortage. Todays failure by Exxon has resulted in wholesale price spikes of as much as 7¢ to some retailers, so it is very likely that gas prices will increase in the coming days.
What's troubling, is that something as innocuous as a mylar balloon is responsible for depriving the world's seventh largest economy of nearly 10% of its gasoline supply. Unfortunately, icidents like this are not unusual for Exxon. Over the years, raccoons have been credited with shutting the Torrance refinery down. Here is a partial list of peculiar refinery fails: