US fuel prices may become volatile after Northeast refinery closures
By BEN LEFEBVRE
Fuel prices could become more volatile because of refinery shutdowns in the Northeast, the US Energy Information Administration (EIA) said Friday.
The closure of Sunoco’s Marcus Hook refinery and ConocoPhillips’ Trainer refinery, and the potential shuttering of Sunoco's Philadelphia refinery, could bring 50% of the region's refining capacity offline.
Gulf coast refiners can make up the loss by shipping fuel via pipeline, but any problems encountered with the transport could lead to price spikes, the EIA said.
"Reduced short-term product supply flexibility due to longer delivery times and potential transportation bottlenecks for sources outside the region could increase price volatility," the agency said in its report.
Sunoco and ConocoPhillips said during the past two months that they will close the refineries if no buyers are found. Gasoline imported from Europe and brought north from the Gulf Coast makes the market extremely competitive and have resulted in razor-thin profit margins for refiners in the region.
Disruptions in fuel prices in the Northeast could impact the wider national fuel market, said Gene McGillian, analyst and commodity broker at Tradition Energy.
"(Gasoline futures) prices are based on New York Harbor prices," McGillian said. "When you start to see disruptions in the Northeast markets, it's definitely reflected in gasoline futures."
In 2010, the three refineries produced a combined 315,000 bpd of gasoline, 194,000 bpd of diesel fuel and 41,000 bpd of jet fuel, according to EIA data.
Dow Jones Newswires
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