Friday August 7th, 2020 5:08AM

Gas prices could rise after fire-stricken refinery closes

By The Associated Press
Related Articles
  Contact Editor

The largest oil refinery on the East Coast said Wednesday that it will close after a devastating fire last week that set off explosions and damaged equipment, and analysts said consumers could see gas prices rise as summer travel hits full swing.

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, AAA spokeswoman Jana Tidwell said in a statement.

The refinery has been an important source fueling transportation in the region, far from Gulf Coast refineries, and "at least temporarily, it's going to require some logistical shifting that could come at a cost," said Kevin Book, managing director at Clearview Energy Partners.

But while the amount of gasoline that will be lost from the refinery is sizable, it can easily be made up by imports from Europe or elsewhere, said Jonathan Aronson, a research analyst at Cornerstone Macro.

"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.

U.S. Sen. Pat Toomey said in a statement that his office was in touch with company officials and that he hopes that an alternative will emerge in coming weeks to prevent the refinery from closing permanently.

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 U.S. Bankruptcy Court in Delaware.

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 Credit Suisse Asset Management and Bardin Hill.

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 Girard Point refinery, one of two at the PES complex in south Philadelphia.

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.

United Steelworkers, which represents the refinery workers, is investigating whether the company had insurance coverage for a destroyed alkylation unit, Ryan O'Callaghan, the president of Local 10-1, told The Philadelphia Inquirer. It would push the company to rebuild the unit, he said.

"It appears they're cashing the check and heading for the doors," he said.


Levy reported from Harrisburg, Pennsylvania. Bussewitz reported from New York.


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.

  • Associated Categories: U.S. News, Associated Press (AP), AP National News, AP Online National News, Top U.S. News short headlines, AP Business, AP Business - Corporate News, AP Business - Economy, AP Business - Industries, AP Business - Utilities
© Copyright 2020
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
Gas prices could rise after fire-stricken refinery closes
Analysts say summer travelers in the Mid-Atlantic region could see gas prices rise after the announcement that a Philadelphia oil refinery hit by a fire will close
5:00PM ( 3 minutes ago )
The Latest: Witness could face perjury in Navy SEAL trial
Officials have informed a Navy SEAL witness that he could face a perjury charge after he testified that he _ and not Special Operations Chief Edward Gallagher_ had killed an Islamic State prisoner in Iraq
4:59PM ( 4 minutes ago )
Democrats clash in 2020's opening debate, aiming at Trump
2020 Democrats converge in Miami for first night of debates
4:58PM ( 6 minutes ago )
Associated Press (AP)
Ex-USC gynecologist charged in sex assaults of 16 patients
Los Angeles prosecutors say a former University of Southern California campus gynecologist has been charged in the sexual assaults of 16 patients at the campus student health center
4:20PM ( 44 minutes ago )
Democrats hope Mueller testimony will have 'profound impact'
The chairman of the House Judiciary Committee says he expects special counsel Robert Mueller to have "a profound impact" when he testifies before Congress
4:08PM ( 55 minutes ago )
Immigrant parents frantic over daughter in gov't custody
Attorneys for a 7-year-old girl in government custody have sent legal notice to the Justice Department demanding her release
4:07PM ( 56 minutes ago )
AP National News
Seoul: US, N. Korea in talks to set up 3rd Trump-Kim summit
Seoul: US and North Korean officials holding "behind-the-scenes" talks to set up a third Trump-Kim summit
3:02PM ( 2 hours ago )
Defense presents testimony in Navy SEAL murder case
Defense lawyers went on the offensive in the murder trial of a Navy SEAL accused of killing a wounded young Islamic State prisoner in Iraq
3:01PM ( 2 hours ago )
Co-star of 'Dog the Bounty Hunter' dies of cancer at 51
The wife of "Dog the Bounty Hunter" reality TV star Duane "Dog" Chapman has died
2:56PM ( 2 hours ago )
AP Online National News
Defense: Chinese scholar's killer offered to locate body
Lawyers for a former University of Illinois doctoral student convicted of killing a scholar from China says he offered after his arrest to divulge where her remains are in exchange for a life sentence
3:04PM ( 2 hours ago )
Alleged sex tape in R. Kelly case turned over to defense
Prosecutors have turned over to R. Kelly's attorneys a tape they say shows the singer having sex with a minor girl two decades ago
1:56PM ( 3 hours ago )
Judge accused of aiding wanted immigrant wants pay restored
A lawyer for a judge charged with helping a defendant evade an immigration enforcement agent says it's unfair to take away her salary while she's fighting to clear her name in court
1:25PM ( 3 hours ago )
Top U.S. News short headlines
Trump says he 'made' Fed Chairman Powell
Trump complains he 'made' Fed Chairman Powell but now would like to have ECB head Draghi
4:34PM ( 29 minutes ago )
Markets Right Now: Dow has small loss as momentum fades
The Dow Jones Industrial Average and S&P 500 are closing with small losses Wednesday after failing to hold onto early gains
4:26PM ( 37 minutes ago )
California, Canada sidestep Trump, ink deal on emissions
California and Canada sidestep Trump administration, announce partnership on reducing vehicle emissions
3:00PM ( 2 hours ago )
AP Business
Tech leads stocks higher amid US-China trade deal hopes
Stocks are holding on to modest gains on Wall Street in afternoon trading after an early rally led by technology companies lost some momentum
2:19PM ( 2 hours ago )
Paris prosecutor: no sign Notre Dame fire of criminal origin
The Paris prosecutor's office says that there is no evidence from a preliminary investigation to suggest that a fire that destroyed large parts of Notre Dame Cathedral was criminal
1:57PM ( 3 hours ago )
Kenya court stops building of coal plant in heritage site
A Kenyan environmental tribunal Wednesday blocked the construction of a government-backed coal power plant in Lamu County, which hosts a UNESCO world heritage site
12:12PM ( 4 hours ago )
AP Business - Corporate News
Trump heads to Asia for talks on trade, Iran and more
President Donald Trump says he'll be meeting with "a lot of different countries" as he embarks on his third international trip in less than a month
2:19PM ( 2 hours ago )
US warns Turkey it faces sanctions if it buys Russian system
Acting U.S. Defense Secretary Mark Esper is making it clear to Turkey that it will face economic sanctions if it goes ahead with the purchase of a Russian missile defense system
2:05PM ( 2 hours ago )
Trump: China needs to reach a trade deal more than he does
Trump says China needs a trade deal more than he does and says he's ready to impose more tariffs
1:33PM ( 3 hours ago )
AP Business - Economy
Supreme leader says Iranians won't budge over US sanctions
Iran's supreme leader says Iranians won't budge, change their stand after new US sanctions
7:39AM ( 9 hours ago )
Iraqi PM denies allegations attack drones took off from Iraq
Iraqi PM denies allegations drones that targeted Saudi pipelines last month may have taken off from Iraq
5:23AM ( 11 hours ago )
Saudi Arabia vows to help S. Korea if oil supplies disrupted
South Korean President Moon Jae-in has met with visiting Saudi Arabian Crown Prince Mohammad bin Salman, who promised to help with possible fuel shortages in case of supply disruptions caused by tensions in the Middle East
5:07AM ( 11 hours ago )
AP Business - Industries
AP Exclusive: Imprisoned supercop's escape from Venezuela
Political fugitive Iván Simonovis was racing toward an island rendezvous with freedom when Venezuela's crisis, in the form of water and sediment-filled gasoline, choked off his boat's motor _ almost sabotaging a meticulously planned escape
2:49PM ( 1 day ago )
Hidden oil spill: New study contradicts owner's claims
A new federally led study of oil seeping from a platform toppled off Louisiana 14½ years ago finds releases lower than other recent estimates
9:01PM ( 1 day ago )
Jay Inslee: End government partnership with fossil fuels
Democratic presidential candidate Jay Inslee is proposing a clean break between the federal government and the fossil fuel industry, ending tax breaks for big oil and banning drilling on federal land
8:42PM ( 1 day ago )
AP Business - Utilities
The Latest: Witness could face perjury in Navy SEAL trial
Officials have informed a Navy SEAL witness that he could face a perjury charge after he testified that he _ and not Special Operations Chief Edward Gallagher_ had killed an Islamic State prisoner in Iraq
4:59PM ( 4 minutes ago )
Democrats clash in 2020's opening debate, aiming at Trump
2020 Democrats converge in Miami for first night of debates
4:58PM ( 6 minutes ago )
'Dog the Bounty Hunter' co-star Beth Chapman dies of cancer
The wife of "Dog the Bounty Hunter" reality TV star Duane "Dog" Chapman has died
4:50PM ( 14 minutes ago )
Rescue ship with 42 migrants defies Italy order to stay out
A German humanitarian ship carrying 42 migrants rescued off Libya two weeks ago is in Italian waters within sight of Lampedusa island in defiance of a ban by the country's hard-line interior minister
4:47PM ( 16 minutes ago )
'They died in each other's arms,' migrant's mother says
The mother of a man who drowned alongside his 23-month-old daughter while trying to cross the Rio Grande into Texas says she feels a hole that "nobody can fill."
4:46PM ( 17 minutes ago )