A Richmond, CA oil refinery caught fire late yesterday and has been extinguished. The Chevron fire at an east-bay plant which is the second largest oil refinery in the state of California and accounts for approximately 1/8 of oil refinement in the state could have a big effect on California gas prices.

A similar fire occurred at the same plant in 2007 that shut down processing for three months. Commodities traders have responded as gas prices have spike in California overnight.

Los Angeles gasoline rates spike 25 cents in response to the incident. LA already has the most expensive gas in the country and will see rates rise for at least three months.

100,000 local residents were cautioned to stay indoors as the fires burned, but should be safe now as the flames have been extinguished. Only one injury at the plant ahs been reported and close to 200 residents have been treated in the community.

A similar fire in Washington sent regional gas prices up $1 dollar during the closure.

The Chevron fire has elicited the company to state that the fire was contained to one crude unit while local ABC affiliate KGO-TV reports that the whole plant is shut down.

Closure of the 110-year-old refinery will certainly hurt many of us at the pump because California requires a higher-grade gas than other states; so filling the gap becomes difficult.

The Chevron fire leaves the company scrambling to find replacement barrels that will allow it to operate in a market that is already low on supply.

How long the spike lasts depends largely on when production can begin again.