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Westmoreland

Pipeline reversal project that cuts through Pennsylvania sparks price debate

Patrick Varine
| Tuesday, Dec. 19, 2017, 12:15 p.m.

Allowing oil flow to be reversed in a Pennsylvania pipeline could spike gasoline and heating fuel prices in the region, a coalition of prominent businesses says, despite a company's assertions to the contrary.

"Based on our experience supplying consumers with gasoline and diesel for almost 40 years, we believe if the pipeline reversal is approved, Western Pennsylvania would likely face higher prices, and the Pittsburgh market could see prices over 50 cents per gallon above Philadelphia during the summer," said Mike Lorenz, executive vice president of Sheetz Inc.

In its application to the state Public Utility Commission, Laurel Pipeline Co. officials said a partial reversal of their cross-state pipeline will "provide western and central Pennsylvania increased access to generally lower-priced Midwestern gasoline and petroleum products."

Texas-based Buckeye Partners, which owns the Laurel pipeline, launched the website PASupportsLaurel.com to bolster support for the project. Company officials said they are taking advantage of a shift that has seen East Coast refinery capacity drop 26 percent since 2005, compared to a 10 percent bump in capacity from Midwest facilities, according to the U.S. Energy Information Administration.

Murrysville council this month unanimously approved a site plan and conditional-use application allowing Laurel Pipeline to build a pumping station on a 1-acre pad on the southern side of Route 22 near Hollywood Boulevard.

Changing the flow eastward to a terminal near Altoona could bring as much as 40,000 barrels of fuel from Midwest producers into Western Pennsylvania. The 18-inch pipeline, in place since the mid-1960s, currently flows east to west.

Officials for fuel companies with a presence in Western Pennsylvania said they do not see the benefit for consumers.

"The fact remains that product sourced into the Pittsburgh area from the east is cheaper than product from the Midwest during eight out of 12 months of the year," said Dan Donovan, director of corporate communications for GetGo. "Buckeye's suggestion that discontinuing access to fuel supply from the east will have anything but a negative impact on fuel prices is highly speculative and not based in the reality of how area fuel providers deliver value to customers today."

Buckeye officials say the move is market-driven.

"Domestic refiners in Illinois, Indiana, Kentucky, Ohio and Michigan, which refine primarily North American-sourced crude oil and have expanded to meet shifting domestic energy needs, can adjust output to meet market demands across western and central Pennsylvania," said Buckeye Partners Senior Vice President Bill Hollis. "This is a win for consumers, as wholesale Midwest gasoline prices are historically lower than the East Coast."

The opposing coalition — which has the webpage DenyBuckeye.com — is made up of Pennsylvania businesses, including Giant Eagle Get-Go, Gulf Oil, Guttman Energy, Monroe Energy, Philadelphia Energy Solutions and Sheetz.

Gulf Oil has invested more than $110 million into the Pittsburgh region over the past five years.

"If the PUC grants this reversal, the Pittsburgh area will be shut off from Philadelphia and become more vulnerable to a fuel shortage, while Buckeye earns a much fatter bottom line," said Greg Johnston, the Pittsburgh-based director of terminal operations for Gulf Oil.

Attorney David MacGregor, representing Laurel Pipeline in its case before the PUC, said the result of the proposal will be lower-cost fuel.

"After the reversal, for the first time, lower-cost Midwest supplies and corresponding lower-priced gasoline will be able to reach Central Pennsylvania by pipeline, including Johnstown, Altoona, State College and the surrounding areas," MacGregor said in testimony to the PUC last week. "And, as more volumes move east from the Midwest, they will push out higher cost supplies on the East Coast, particularly product imports from overseas, which are the highest cost supply to the East Coast."

According to opponents, reversing the line forces fuel marketers in the greater Pittsburgh area to become solely dependent on fuel from a single market source: out-of-state refineries to the west, rather than in-state refineries in the Philadelphia area.

"It eliminates choice, which will drive up fuel prices for consumers, and it threatens thousands of Pennsylvania jobs," Johnston said. "It's bad for consumers, bad for businesses, and just plain bad for Pennsylvania."

MacGregor disagreed.

"This project is a win, win, win for PA: substantially lower gasoline prices across the Commonwealth, increased supply options for central Pennsylvania and reduced reliance on foreign oil," he told the PUC.

Patrick Varine is a Tribune-Review staff writer. Reach him at 724-850-2862, pvarine@tribweb.com or via Twitter @MurrysvilleStar.

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