THE largest oil refinery on the East Coast in the United States (US) said on 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 labour officials that it will shut the plant down on 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 on Tuesday night after the first news of the refinery’s possible closure, and prices remained high on Wednesday, according to the markets research company FactSet.
Motorists in the Mid-Atlantic region will likely see modest price increases as more summer travellers hit the road, AAA spokeswoman Jana Tidwell said in a statement.
The refinery has been an important source fuelling 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 Managing Director at Clearview Energy Partners Kevin Book.
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.
US Senator 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. – AP