Gas prices could rise after fire-stricken refinery closes
The largest oil refinery on the
Philadelphia Energy Solutions sent a notice to state labor officials that it will shut the plant down Monday and lay off about 1,020 workers there in the next two weeks after that. The fire significantly damaged equipment and systems at a complex that was already struggling financially, the company said.
Gasoline futures prices spiked Tuesday night after the first news of the refinery's possible closure, and prices remained high Wednesday, according to the markets research company FactSet.
Motorists in the Mid-Atlantic region will likely see modest price increases as more summer travelers hit the road,
The refinery has been an important source fueling transportation in the region, far from
But while the amount of gasoline that will be lost from the refinery is sizable, it can easily be made up by imports from
"We're not expecting any major shocks to retail gasoline (prices)," Aronson said. Consumers are more likely to feel gasoline prices increase due to the price of crude oil, which has been rallying in recent days, he said.
Philadelphia Energy Solutions is pursuing opportunities to restart the complex but cannot give any guarantees and, as a result, "all layoffs are expected to be permanent," the company said.
The company has shown a declining cash balance in the six months through March while its long-term debt grew, according to reports the company files in
The 150-year-old oil refining complex processes 335,000 barrels of crude oil daily, according to PES. The refinery turns the crude into gasoline, jet fuel, propane, home heating oil and other products.
It started as a bulk petroleum storage facility in 1866 and began refinery operations in 1870.
The company emerged from federal bankruptcy court last year after restructuring its debt, leaving its majority ownership in the hands of investment banking firms
Friday's fire at the complex broke out early in the morning, and video showed an enormous orange blast bursting into the sky.
It set off three explosions felt miles away as the fire plowed through a tangle of pipes carrying fuel across the complex, the company has said. It happened at the
The fire erupted in a tank containing a mixture of butane and propane, a fire official said.
Investigators haven't been able to go to some areas at the complex because they haven't yet been assessed by a structural engineer, the city fire commissioner's office said Wednesday.
"It appears they're cashing the check and heading for the doors," he said.
Levy reported from
This story has been updated to correct that Philadelphia Energy Solutions said it would shut the plant down in a notice to labor officials, not in a statement.
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