Report: Shutdown of Refineries Will Mean Fuel Price Hikes Along East Coast
By David Madden
PHILADELPHIA (CBS) — A new federal report looks into what could happen if all three local oil refineries in the Philadelphia area were to shut down.
The study, requested by local members of Congress, looks at both supply and fuel prices.
But another Sunoco facility, in Southwest Philadelphia, is one of the largest along the East Coast. Should that one close down, the Energy Information Administration suggests, there would have to be some major changes in moving refined product around.
Senior analyst Joanne Shore says the Philadelphia region might not be affected too badly, but “other areas would be more difficult to get product to, like inland Pennsylvania and western New York.”
And yes, prices would go up, at least in the short term. How much, Shore can’t say, although she points out that the three facilities together represented about half of all the refining capacity along the East Coast.
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Meanwhile, KYW’s Steve Tawa reports, there’s word that an oil executive has expressed an interest in the Sunoco refinery in Southwest Philadelphia.
The chairman and chief executive of United Refining Corp. is said to be looking over the books and the operation, with a potential decision within weeks on bidding for the refinery.
John Catsimatidis is the first to publicly acknoweldge that there may be life at the refinery after Sunoco pulls out. The New York-based billionaire owns refinery on the Allegheny River, near Erie, Pa.
Fadel Gheit of Oppenheimer and Co., one of the country’s top oil and gas analysts, says the plant would probably fetch only $300 million to $500 million, not including crude inventories. Gheit says it would be a good fit for United, since United already has operations in the Commonwealth of Pennsylvania.
“Somebody who is in the business knows what the downside risks are and is prepared for the volatility of this business,” he notes.
Gheit also notes the deal would be a good outcome for the workers at the plant, and for Delaware Valley motorists, who would be paying a few cents a gallon more by summer if all three unprofitable oil refineries in the Philadelphia area closed.
Sunoco has already shut down operations at its Marcus Hook refinery. Gheit says he’s heard of no interest from potential buyers to run the Marcus Hook property as a refinery.