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Closed refineries to hike pump prices

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On the Grid

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Friday, Jan. 6, 2012

Closing three unprofitable oil refineries in the Philadelphia area will raise the price of gasoline by 2 to 5 cents a gallon in Western Pennsylvania by this spring or summer, an expert said.

That hit to Pittsburgh motorists' wallets will be on top of expected increases through this year in crude oil prices, which will translate into generally higher gasoline prices, said Kent Moors, a Duquesne University political science professor and oil industry expert. Even bigger spikes in the cost of diesel fuel will increase transportation costs for food and other goods, he said.

"This is not an oil crisis, in terms of having enough," said Moors, who's forecasting the price of crude oil to climb to $150 a barrel by the summer. "It's just going to be more expensive."

Without the three oil refineries in Philadelphia, which can process up to 698,000 barrels of crude a day, Pittsburgh's gas is going to be shipped from farther away, which adds costs.

"It's definitely going to have an impact" on gas prices, said Nancy Maricondi, executive director of the Petroleum Retailers and Auto Repair Association in Forest Hills.

Sunoco Inc. has idled a refinery in Marcus Hook and will permanently close it and a larger Philadelphia operation by July if the company cannot find a buyer for the two facilities, the company has said. ConocoPhillips Co. has idled a refinery in Trainer and said in September that it will close that operation if it has not found a buyer by March, the company has said.

The combined capacity of the three facilities represents more than half of the refining capacity in the Mid-Atlantic and Northeast United States, according to the U.S. Energy Information Administration.

"Timing differences between refinery closures and infrastructure reconfigurations or additions could result in spot shortages with price spikes for different fuels in different locations," the EIA warned last month in a report about the refinery closures.

While gasoline produced along the Gulf Coast can be shipped via pipeline or barge, the EIA said, "higher price differentials ... would have to occur to incentivize producers to send more products to the Northeast."

Philadelphia-based Sunoco said its two refineries have lost $800 million over the past three years.

"Exiting the refining business is necessary to maintain Sunoco's viability as a company and preserve the thousands of other jobs we provide in our home state of Pennsylvania," the company said.

Jobs will be lost, according to the United Steelworkers union, which represents more than 1,000 workers at the three refineries. Union officials denounced the pending closures yesterday and called for congressional hearings on the impact the loss of the refineries will have on fuel supplies throughout the region.

"Anytime you have a disruption in supply, you're going to have price spikes and, in the worst case, supply shortages," said Keith Romig, a policy analyst for the Pittsburgh-based union.

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