Philadelphia Energy Solutions Inc (PES) announced Wednesday that they are shutting down operations within the next month after the explosion and fire that occurred in the early morning of June 21. The refinery is the oldest and largest on the East Coast of the United States that once produced 335,000 barrels-per-day. The cause of the fire is still unknown, but the aftermath of the explosion is being felt immediately, in not only the local region but also the entire eastern seaboard.
The refinery is expected to file a notice of intent with state and federal regulators as early as Wednesday June 26, which would start the closure process as well as begin layoffs of over 700 union workers. Tom Conway, Vice President of the United Steelworkers Union International stated Monday, “Any decision to shut the complex would have lasting consequences starting with almost 2,000 workers directly employed by PES and tens of thousands more whose employment depends on the refinery to some degree.” The loss of the refinery will most likely increase the region’s dependence on supplies from Canada, Europe and the Gulf Coast. Marc Amons, senior research analyst at Wood Mackenzie stated, “The United States Gulf Coast will remain a key supplier or refined products with supplemental gasoline imports from Europe likely needed to replenish lost production from the facility.”
The closing of the facility, the tenth largest in the United States, could also lead to higher gas prices as we enter the summer driving season. Spokeswoman Jenifer Moore of AAA stated, “While it is too early to know how much prices could increase and for how long, motorists in the region will likely continue to see a fluctuation in pump prices.” While the markets speculate and fluctuate with every latest development on the refinery, it will be noteworthy to see how this situation plays out.