Daily on Energy: Closure of largest refiner on East Coast draws prying eyes from Washington

The company that owns the refinery, Philadelphia Energy Solutions, announced last week that it will close the plant because the damage was so severe. The firm said it would seek to sell the plant, offering an unclear timeline on restarting it, if ever.

The refinery is the largest on the East Coast, and its loss will be felt in terms of jobs and higher prices at the pump.

Safety is also a big factor: Democratic Rep. Mary Gay Scanlon of Pennsylvania will be meeting with the owners of the plant on Tuesday afternoon, along with officials from the city and the United Steelworkers union, to discuss the future of the plant and its employees while making sure that federal agencies conduct an investigation into the cause of the fire.

Scanlon’s office tells John they want to ensure the agencies have access to the facility to conduct a full investigation. Scanlon is not completely convinced that federal investigators from the Occupational Safety and Health Administration and other agencies are moving quickly enough in conducting the investigation, said one aide.

Scanlon sent a letter to OSHA, the Chemical Safety Board, and the Bureau of Alcohol, Tobacco, Firearms and Explosives, which are conducting the investigation, to ask them to share results so that remediation efforts can be implemented.

She said the potential release of hydrogen fluoride gas, which was a risk during the fire, placed nearly 1 million people in harm’s way.

An OSHA spokesperson said the agency is actively “investigating the incident” and has six months to complete the investigation. The ATF did not return requests for comment.

The Environmental Protection Agency told John last week that it had officials on the ground to track hazardous emissions soon after the explosion but that the EPA command center was dismantled after the fire was put out. EPA is not part of the investigation but could take enforcement actions against the refinery based on the results of the federal probe, said a spokeswoman.

A refinery official in Washington told John that the plant’s closure is “definitely going to have an impact on the local community there” while putting pressure on the region’s fuel supply.

Local gasoline prices are already ticking upward ahead of the July 4 holiday. The official explained that without the plant in operation, the East Coast is now reliant on the Colonial Pipeline that moves gasoline and jet fuel to the region from the Gulf Coast. But the pipeline is already “maxed out” and won’t necessarily be able to fill the gap in the fuel supply left by the closed refinery.

Pennsylvania gasoline prices were averaging around $3 per gallon, making fuel prices in the Keystone State one of the highest in the nation, according to AAA.

Other East Coast states are nearing the highest in the nation, with average fuel prices just behind Pennsylvania from New Jersey to New England.

The refinery official explained that relief likely won’t come from domestic fuel producers but from foreign imports from Canada and possibly Europe.

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OPEC CUTS PRODUCTION TO RAISE PRICES: OPEC agreed late Monday night to keep cutting oil production to keep prices on the high side while codifying a relationship between its members and non-OPEC Russia to continue cooperating on supply cuts indefinitely.

The production cuts will go on for another nine months, with a decision on future cuts not likely to be discussed until late in the year.

The meeting in Vienna was also used to renew a 2016 agreement between OPEC countries and Russia to continue their alliance under the “Declaration of Cooperation.”

The countries reaffirmed their commitment to a stable market “and the return of confidence and investment to the oil industry,” read a statement issued Tuesday.

OPEC first began the production cuts to counter an oil glut that occurred in 2014 and lasted through the 2016 presidential elections. The glut was caused by too much oil flooding the global market, forcing prices lower and cutting in half many OPEC countries’ revenues.

The glut forced Saudi Arabia, the largest OPEC producer, to form a plan called “Vision 2030” to make its economy less dependent on oil in about a decade.

OPEC uses systematic supply cuts to balance supply with demand to avoid another glut and the low prices that come with it. The OPEC pact with Russia is effectively there to keep prices high enough for them to get an adequate return on investment.

The biggest factor of uncertainty for OPEC has been U.S. oil production, which began to surpass both Russian and Saudi production last year.

UTILITY BEGINS CONSTRUCTION ON NATION’S SECOND OFFSHORE WIND PROJECT: Electric utility Dominion Energy began construction Monday on an offshore wind project in the Atlantic Ocean off the coast of Virginia.

The Coastal Virginia Offshore Wind project would be the second offshore wind project in the United States and the first to be built in federal waters.

Dominion is working with Orsted, a Denmark-based power company, to build two six-megawatt wind turbines 27 miles off the coast of Virginia Beach, with the potential to provide power to 3,000 homes.

The companies expect to finish the $300 million project and begin operating it by late 2020.

So far, Block Island, a small 30-megawatt wind farm off the Rhode Island coast that can power 17,000 homes, is the nation’s only offshore project.

Offshore wind has long struggled to gain traction in the United States to keep pace with Europe, where the energy source is mainstream, cheap, and has benefited from subsidies, especially in northern countries such as Britain and Germany. But costs have dropped in America as more companies have competed for leases and technology has become cheaper.

MAYORS APPROVE RESOLUTION PRESSING FOR CARBON PRICING IN CONGRESS: Mayors gathering for their annual meeting Monday in Hawaii approved a resolution urging Congress to pass carbon pricing legislation.

It’s the first time the United States Conference of Mayors voted on a carbon pricing resolution.

At least a few Republican mayors supported the proposal.

“As mayors we are all committed to working hard on this issue, but we cannot do it alone,” said Democrat Jackie Biskupski, the mayor of Salt Lake City, Utah, who introduced the resolution. “We need Congress to enact federal laws that will support our work and spur the kind of American innovation and market-based solutions that will slow and eventually stop the progression of climate change.”

MONTANA JOINS ALLIANCE OF GOVERNORS COMMITTED TO PARIS AGREEMENT: Montana’s Democratic Gov. Steve Bullock is bringing his state into the U.S. Climate Alliance, a coalition of governors who pledge their states to live up to the goals of the Paris climate accord.

Montana is the 24th state, plus Puerto Rico, to join the alliance, which now covers 55% of the U.S. population, representing 40% of the country’s greenhouse gas emissions, according to the group Climate Nexus.

Bullock, a presidential candidate, signed an executive order Monday making Montana part of the alliance. The order also sets a target for Montana to reach net-zero greenhouse gas emissions in the electricity sector by 2035. That is a tall order, considering coal plants provide nearly half Montana’s electricity. Most of the rest of the state’s electricity, however, comes from low-carbon hydropower.

“It doesn’t matter if you’re from a red state or a blue state, climate change is a threat to us all,” Bullock said in a Twitter post Tuesday. “I joined the @USClimate Alliance to honor the Paris Climate Accord — because if this Administration won’t act on the climate crisis, we will.”

DNC TO VOTE ON CLIMATE DEBATE AFTER ACTIVIST PRESSURE: The Democratic National Committee will vote on whether to host a debate focused solely on climate change, in response to pressure from presidential candidates and activist groups.

The DNC had rejected calls to do a climate-only debate, saying it would be unfair to single out one issue, which could benefit candidates who focus on it, such as Washington Gov. Jay Inslee, who has led the charge for a climate debate.

But the DNC’s 60-member executive committee has reconsidered and will allow a vote on a resolution to hold a climate debate after complaints that the first Democratic debates last week gave limited attention to the issue.

If the executive committee approves the idea, the full 447-member committee will vote on it at its next meeting August 22 to 24 in San Francisco.

The DNC also plans to vote on a second, alternative resolution allowing candidates to participate in a climate debate sponsored by another organization.

“Thanks to the progressive grassroots, climate activists, and Democrats across the country, we are one step closer to giving climate change the attention it requires in this race,” Inslee said in a statement Monday.

The Rundown

Washington Post Existing fossil fuel plants will push the world across a dangerous climate limit, research finds

Wall Street Journal US drilling slowdown triggers oil bankruptcy

Reuters China’s climate ‘ambition’ pledge could lead to tougher CO2 targets

New York Times A heat wave tests Europe’s defenses

Bloomberg Saudi Aramco to restart preparations for mega IPO

Calendar

THURSDAY | July 4

Independence Day.

MONDAY | July 8

All day, Denver. The Energy Department’s Advanced Research Projects Agency – Energy, or ARPA-E, holds its annual Innovation Summit, July 8-10.

9 a.m., 1030 15th St. NW. The Atlantic Council hosts the International Energy Agency’s 13th meeting of the Gas and Oil Technology Collaboration Program. July 8-9. The meeting will focus on efforts by government, academia, and industry to explore the role of low-carbon oil and gas in meeting the challenges of growing energy demand.