RBOB gasoline futures jumped overnight, accelerating its recent ascent since the explosion and massive inferno at the Philadelphia Energy Solutions (PES) facility, following a Reuters report that the largest east coast refinery is expected to seek to close its oil refinery in the city after a massive fire caused considerable damage to the complex.
Completion of the refinery, the largest and oldest on the east coast of the United States, would not only result in hundreds of lost jobs, but also heavily higher gasoline prices such as petrol supplies pushed into the busiest, densely populated US corridor.
PES is expected to announce a statement of intent with state and federal regulators as early as Wednesday, and initiated the process of closing the refinery, sources said.
The refinery, which can still change its plans, is also expected to start redundancies from the 700 unions at the plant already on Wednesday, Reuters reported. The redundancies may include about half of the union, while the remaining employees reside on site until the explosion investigation is completed.
As previously reported, there are 335,000 barrels per day (bpd) complex, located in a densely populated area in the southern part of the city, erupting in flames in the early hours of Friday, in a variety of explosions that could sounds miles away and like someone compared to a meteor strike or a nuclear weapon goes off.
The cause of the fire was still unknown from Tuesday, although city fire officials said it started in a butanate around 4:00 am (0800 GMT). It destroyed a 30,000 bpd alkylation unit that uses hydrofluoric acid to treat refined products. If the acid had burned, it could have resulted in a steam cloud that could damage the nearby skin, eyes and lungs.
Before the massive inferno, the refinery had suffered many years of financial struggle and forced to slip employee benefits and scale back capital projects to save money. It went through a bankruptcy process last year to reduce its debt, but the difficulties continued when cash on hand went down, even after they came out of bankruptcy in August. Some have speculated that the cost saving led to the structure becoming fragile and accidentally exposed.
After bankruptcy, Credit Suisse Asset Management and Bardin Hill became the controlling owners, with former primary owners Carlyle Group and Sunoco Logistics, a subsidiary of Energy Transfer, holding a minority stake. Related: The Last Really Underdeveloped Middle East Oil Border
Friday's fire was the second for two weeks on the complex, sprang from Philadelphia's mayor for a working group to look at both causes and society's aftermath in the wake on the events. A spokesman for the mayor Jim Kenney refused to comment on the potential closure of the facility.
It may be difficult as on-stage investigators are said to be dealing with unstable structures that must be certified by engineers, reducing the request, by officials said. The investigation may eventually take months or maybe years. In addition, the Department of Environmental Protection said they have concerns about the integrity of on-site storage tanks, the agency said Tuesday. The US Chemical Safety Board is also investigating the incident, according to Reuters.
Although none of this will bring much news outside Philly, what will affect all East Coast drivers is that gasoline futures increased as much as 5.4% on Wednesday to $ 1
Futures are up 8.9% since Thursday's proximity.
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