The cost of gasoline at the pump is likely to continue its upward climb after refineries in the US Northeast have begun to shut down or announce shutdown dates because of lost revenue. While gas prices rose by an additional 6% in February refineries have failed to capitalize on those higher prices.
According to the Wall Street Journal Philadelphia-based Sunoco will close its largest refinery in the region in July which will likely lead to an increase in gasoline prices.
In defending the Sunoco plants closing a spokesman noted:
“Our Northeast refining business has lost nearly a billion dollars in the past three years, and those losses have threatened Sunoco’s very existence as a company.”
In the meantime Mideast tensions, specifically in Iran, alongside an increased worldwide demand for oil has not helped production facilities. Refineries in the Northeast US specifically don’t have the facilities needed to handle lower quality, cheaper crude while a lack of oil pipelines to the region makes access to cheaper oil expensive to procure.
As if national and international problems were not enough, increasingly stringent EPA regulations and governmental rules have made it hard for some refineries to operate efficiently while still turning a profit.
When combined with rising summer gas demand the closure of refineries is expected to push the cost of gas over the $5 per gallon mark by the time the summer months arrive.
Do you think the closing of several refineries could have been avoided and may have even helped gas prices if pipelines were approved and the EPA was forced to back off a little bit?