If Sunoco shutters the plant, it would be the third refinery closing in southeast Pennsylvania since September — representing 50% of the total refining capacity in the Northeast — said the agency, which is part of the U.S. Department of Energy. Diesel fuel prices could be hurt the most by this happening.
“The additional loss of volumes and reduced access to distribution systems may create temporary, localized shortfalls and associated price surges,” EIA said in its report.
Northeast refineries usually have supplied about 60% of the ultra-low-sulfur-diesel fuel consumed in the region. The rest comes from Gulf Coast refineries and imports, EIA said.
Diesel fuel is refined in the Gulf and Midwest, but because there’s not much excess pipeline capacity from the Colonial pipeline to move the product, fuel to the Northeast might have to be shipped by rail, said John Felmy, chief economist at the American Petroleum Institute. Rail traffic is already commanding a fair amount of traffic with increase shipping.
If Sunoco’s Philadelphia refinery shuts down, suppliers may need to find 180,000 more barrels per day of low-sulfur diesel fuel by 2013, the agency said. And logistical constraints on product delivery to certain areas of the Northeast may present additional challenges, EIA warned.
“If you live in the East Coast, you should be very, very worried. They have lost 60% of their refinery capacity,” said Phil Flynn, senior market analyst for PFGBest in Chicago. “The East Coast relies now more on imports than ever before,” he said. “Any type of global disruption, and they may be held hostage.”
These development will closely be followed as this story continues to take shape and might take over trucking companies fuel management and fuel savings. The Northeast could become the new West Coast if things don’t straighten themselves out.
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