Gasoline supplies remained ample throughout Los Angeles last week, stabilizing high pump prices throughout the region. But another problem might be looming: a shortage of storage capacity.
When California became a net importer of refined fuels seven years ago, the ports of Los Angeles and Long Beach became key storage areas for gasoline and diesel shipped in from other states and countries to augment the supplies of local refineries.
But massive container traffic is crowding out these facilities and there are concerns that the region will become more vulnerable to a supply squeeze as local demand grows and local refinery output stagnates.
"There is not a lot of capacity for storage; it runs full. And demand is running faster than refiners' capacity," said Dave Hackett, president of the Irvine energy consulting firm Stillwater Associates LLC, which conducted a study of the issue for the California Energy Commission.
The limited storage capacity leaves the region vulnerable to a supply squeeze, especially when a refinery goes off line for repairs or because of a fire, both of which occurred this summer.
The state depends on imports for 10 percent of its gasoline and diesel and 25 percent of its jet fuel. Some estimates project that by 2025, California will need to import 5 billion gallons of gas and diesel a day, double what it does now.
While all this additional fuel needs a place to be stored, the boom of imported goods manufactured in Asia means more terminal space has been gobbled up by companies shipping in cargo containers, which generates more revenue for the ports than liquid bulk storage.
Oil companies say the biggest problem is at the Port of Los Angeles, which has nine liquid bulk terminals that handled 11.9 million metric tons of oil last year, just a fraction of the 146.3 metric tons of general cargo that passed through the port.
Oil companies say that 8.8 million barrels of bulk liquid storage has been lost to general cargo terminals in recent years and additional space may be lost as two expired leases come up for renewal: Valero Energy Corp.'s 926,000-barrel-per-day capacity terminal at Berth 164 and ConocoPhillips Co.'s facility at Berths 148 151.
"Based on the port's preference of leasing space to container ships, there's another 3.4 million barrels in jeopardy," said Joe Sparano, president of the Western States Petroleum Association, a trade organization.
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