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Shell Plant Closure Could Hurt Farmers

June 29, 2004|Elizabeth Douglass | Times Staff Writer

California cotton farmers could face a diesel shortage during harvest this year if Shell Oil Co. closes its Bakersfield refinery as planned Oct. 1, an industry group warned lawmakers Monday.

The prediction by the California Independent Oil Marketers Assn. came during a hearing with state lawmakers, where Shell offered up the more hopeful news that it was "in discussions" with four possible buyers for the refinery.

Although the Bakersfield refinery is much smaller than others in the state, the question of its fate has energized consumer groups, lawmakers and state officials who worry that the plant's closure will worsen California's chronically tight fuel supplies and ultimately boost pump prices.

Officials have grown particularly concerned about the fall harvest season in the San Joaquin Valley, home to some of the state's most fertile fields. Many farmers need a steady flow of diesel to power their equipment, and the Bakersfield refinery -- maker of 6% of the state's total production -- has met their needs for decades.

"If the refinery closes in October, there will be a critical fuel shortage in the San Joaquin Valley.... There will be absolute outages in the area," said Jay McKeeman, executive vice president of the Sacramento-based marketers group, which represents independent companies that buy fuel from Shell for resale to farmers and others.

"We just ask that adequate fuel supplies be brought in before they pull the plug" on the refinery, he said.

Shell has pledged to replace about half of the lost diesel production by boosting output at its Bay Area refinery in Martinez and shipping it to Bakersfield by pipeline, but that solution won't be ready for at least a year.

Until the pipeline project is completed, wholesale customers -- many of which cater to farmers -- will have to pick up fuel at Shell terminals in Los Angeles or elsewhere. Under that scenario, companies that now pick up five tankers of fuel a day at Shell's Bakersfield terminal could spend an entire day retrieving a single load from Los Angeles, McKeeman said. "We believe there is a problem brewing here."

The most vulnerable would be cotton producers, which must harvest vast fields from late September to early November, according to the Kern County office of the University of California Cooperative Extension.

Some crops harvested year-round, such as alfalfa and carrots, may be affected too if diesel is in short supply or its price rises at the wrong time.

The Assembly Committee on Natural Resources, which held the hearing Monday, approved a resolution urging Shell to keep the refinery open through the end of the year. Christine Kehoe (D-San Diego) sponsored the resolution to give potential buyers more time to act.

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