The loss of the largest refinery on the East Coast two weeks ago due to an explosion that rocked the Philadelphia area continues to drive fuel prices up as the region is forced to replace lost gasoline supplies, indefinitely, from as far away as India.
The average price of gasoline on the East Coast rose by nine cents in the last week since the refinery fire, the federal Energy Information Administration reported on Wednesday.
The analysis was the agency’s first formal assessment on the implications of the lost Philadelphia Energy Solutions refinery in the run-up to the Independence Day holiday. The closure of the facility due to the severe damage it sustained will reduce gasoline supplies by 160,000 barrels per day and diesel supplies by 100,000 barrels per day.
The region is relying on gasoline stockpiles, but those are dropping fast since in the wake of the fire, the agency said.
It explained that the refinery closure will likely force the East Coast to find new sources of fuel, which will most likely come from foreign imports. Increasing the region’s reliance on gasoline imports would solve its supply problem, but it could also force prices higher due to the cost of shipping the fuel.
“The East Coast can import gasoline supplies from the actively traded Atlantic Basin, which is supplied by refineries in Eastern Canada, Northwest Europe, the Mediterranean, and India,” the EIA said. The region has relied on the Atlantic Basin market to get fuel in the past when supplies have been lower.
The agency said the region will also have to rely on increased supplies from the Gulf Coast and the Colonial Pipeline, which feeds gasoline to the nation from Louisiana all the way to Washington, D.C., and New York City. Nevertheless, refinery officials tell the Washington Examiner that the massive pipeline has become “maxed out,” making it harder to replace the refinery’s production losses using Gulf Coast suppliers.
Experts predict the region will become more dependent on Canadian and European refineries in the near future to help keep supplies stable and prices low.
“These imports can arrive at terminals in New York Harbor and then be distributed from there by pipeline, barge, or truck,” the EIA said. Other sites in New Jersey could also be retrofitted to take in more fuel imports from abroad.
