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Can you smell it? It's something rotten in the State of California ...  and the smell is coming from the bloated carcass of a dying Bakersfield refinery which has been driven into bankruptcy by Shell.

Even though this week's DOE inventory report showed huge builds in oil and gasoline inventories, the cost of gasoline in California is in an upswing mode with jitters about the threat of an oil strike against Shell and other refiners. Royal Dutch Shell, which posted record profits today equaling £700 a second (that's $1,000 per second in US currency) is now being investigated by California Attorney General Jerry Brown regarding the bankruptcy of the Big West Flying J refinery in Bakersfield.

Flying J, an aggressive competitor and supplier to independently owned gas stations and truck stops, has declared bankruptcy.  Reason: Shell has refused to supply the refinery with oil for credit reasons.

Shell has been trying to shut down the Flying J/Big West refinery for years. On January 10, Senator Barbara Boxer asked the California Attorney general to investigate Shell for market manipulation. It isn't the first time. Shell was forced to sell its Bakersfield refinery to Flying J as part of an anti-trust investigation where internal documents showed that Shell was going to shut down the wildly profitable operation in order to restrict gas supplies and drive prices up. 

The bottom line is that all of these jitters, plus planned shut downs by other California refineries will force prices up. 

And that's just fine with Shell.