Feds: More Gulf Coast fuel needed to supply Northeast

Larger shipments of gasoline and diesel from the Gulf Coast are needed to offset planned closures of three major refineries in the Northeast, according to a new federal report.

Northeastern states could experience “spot shortages with price hikes” for gasoline and other fuels as the region faces the idling of three critical refineries in Pennsylvania, the U.S. Energy Information Administration concluded in a recent report.

“The Gulf Coast is likely to be a significant alternate supplier,” the report notes, specifying the Colonial Pipeline as a main transport route.

“Even so, pipeline capacity will still be insufficient to make up the entire lost production volume,” the EIA forewarned.

Sunoco announced this month that it will idle operation of its Marcus Hook refinery in Pennsylvania. The announcement came two months after ConocoPhillips decided to take offline its Trainer, Pa. refinery and prepare the facilities, associated pipelines and terminals for sale.

If Sunoco moves forward with plans take its Philadelphia refinery offline, too, the nation’s populous Northeast region will lose half of its total refining capacity, according to the U.S. Energy Information Administration.

The impact on refining capacity and infrastructure could stress the regional supply of gasoline, jet fuel and ultra-low sulfur diesel, the EIA concluded in its report.

The U.S. refining industry, and Northeastern refiners in particular, are suffering from stagnating demand and competition from imports. Northeastern refineries supply 40 percent of the region’s gasoline needs, according to the EIA, with the rest coming from imports or piped in from the Gulf Coast.

As more Northeast refiners go offline — Philadelphia-based Sunoco, the region’s dominant refiner, has announced that it’s getting out of the refining business all together – the Gulf Coast will become and even more important supplier, the report noted.

The Colonial Pipeline, a main artery for transporting gasoline and other refined products from Texas up along the East Coast, is expanding its capacity in part to respond to closed refineries in the Northeast.

Additional supply could come from imports, beefed up production at remaining Northeast refiners and small rail shipments from Midwest refiners, the EIA said.