Shell sold off another California refinery. This time its Wilmington plant to Tesoro Corp, making the San Antonio based refiner a major player in the West, particularly given its acquisition of 390 Shell and USA gasoline stations.
What a difference two years makes. In 2005, Shell was forced by public officials and consumer advocates to sell its Bakersfield refinery, which it had intended to demolish. That would have shorted the West Coast market on gasoline and driven up the price of gasoline. Shell has clearned learned the lesson that it cannot destroy limited refining capacity in order to worsen inventory levels and drive up the price of gasoline.
Shell had originally planned to close and demolish the Bakersfield refinery on October 1, 2005. With the help of whistleblowers, the Foundation for Taxpayer and Consumer Rights exposed a series of internal documents from Shell that showed the company was closing its highly profitable refinery, despite ample crude supply, very likely in order to drive up gasoline prices. The disclosures led to pressure from California Attorney General Bill Lockyer and US Senator Barbara Boxer that forced Shell to keep the refinery open through March and find a buyer.
PBS NOW chronicled the campaign that kept Bakersfield’s refinery running and became a national example to Big Oil that attempts to artificially reduce supply in order to hike gasoline prices would not be tolerated. Now Shell gets to make a bundle of cash by selling its Wilmington facility outright. Hopefully, Tesoro’s financial incentive will remain to make as much gasoline as possible to compete with the majors, not to short the market.