Northeastern U.S. Will Increase Dependence On Gulf Coast Refineries

According to many recent reports, the northeastern United States is expected to lose half of its regional fuel production capability following financial troubles which have pushed the refineries to a standstill. Many economists believe the situation is likely to increase the northeastern states dependency on the gulf coast refineries. According to industry sources, the gulf refineries already supply about half of the northeastern demand for petroleum products.

U.S. officials have said that a Houston to New York pipeline is expanding to meet the growing demand to transport gasoline and other fossil fuels from the Gulf Coast in order to fill any potential void in supply. However, sources say that with the halt in production at two major Pennsylvania refineries last year and the potential halt of a third looming, supplies of gasoline, jet fuel and heating oil could become stressed. U.S. energy officials have expressed their concern that northeastern states could experience spot shortages and price hikes in the future as their refineries cease to operate.

According to reports, the company Sunoco has announced that it will idle operations of its 335,000 barrel per day refinery in Marcus Hook, Pennsylvania. The company has said its plan is to pull out of the refining business altogether. Further, the company has said that in the absence of a buyer for its 178,000 barrel per day refinery in Philadelphia, it too will also go offline. Reportedly, ConocoPhillips is making similar moves, taking its 185,000 barrel per day refinery in Trainer, Pennsylvania off line to prepare it for sale.

Industry sources say a combination of a stressed economy and improved fuel efficiency has caused the demand for some fuels to plateau. Further, competition for larger more efficient refineries on the Gulf Coast and imports from Europe add more pressure to the northeastern producers. Sources say in 2010, the gulf coast area refiners produced a net 3.4 million barrels per day of the particular category of oil needed in the northeast.