We smell rotten eggs
MIKE LORENZ of Sheetz and POLLY FLINN of Giant Eagle explain why they oppose reversing the flow of the Laurel gas pipeline
Many in the gas and oil industry are aware that Buckeye Partners’ affiliate Laurel Pipeline has asked the Pennsylvania Public Utility Commission to approve reversing the flow of the pipeline, which currently delivers gasoline and other products to Western Pennsylvania from the East Coast. However, very few Pennsylvanians truly understand the negative implications this would have for their families. Adopting this proposal would lay a rotten egg on promises of lower gas prices and a reliable fuel supply.
Some want you to believe that reversing the pipeline would be beneficial to Pennsylvanians, but that is simply not what the facts reveal.
As fuel suppliers to the region for decades, with the mission of being dependable, low-cost providers to our customers, we have developed a comprehensive understanding of the supply chain and logistical options. We believe the proposed reversal of the pipeline would eliminate necessary supply sources on which the commonwealth has long depended, resulting in higher prices and potential shortages for consumers while benefiting Buckeye Partners and granting Midwest refineries exclusive access to the Pittsburgh market.
It is for these reasons that Giant Eagle and Sheetz have joined with other Pennsylvania businesses — including shippers, terminal owners and refiners — in formally opposing the reversal.
Currently, the Pittsburgh region can receive petroleum products from both East Coast and Midwest refineries. This creates healthy competition and results in the best pricing for businesses and consumers.
Access to the East means we can be supplied from East and Gulf Coast refineries, as well as imports that arrive in New York Harbor. The proposed pipeline reversal would place all our eggs into one very confined basket, blocking deliveries from the highly competitive eastern marketplace and limiting the Pittsburgh region to products from Midwest refineries.
Pricing drives the fuel market. It is safe to say that, if Midwest fuel were cheaper, the Pittsburgh market would be flooded with it. But the reality is that this occurs only one-third of the time. Product sourced from the East is cheaper than product from the Midwest eight out of 12 months of the year.
Under the current system, fuel costs for businesses are kept in check because companies can negotiate lower prices. And this is because they have the option of buying from either East Coast or Midwest refineries. The savings then can be passed on to consumers.
For most of the year, gasoline sourced from the Midwest is significantly more expensive than gasoline sourced from the East. During peak driving season, gasoline from the Midwest can cost 50 cents per gallon more.
Refineries in the Midwest already are stressed during summer months and unable to meet consumer demand, hence the high prices. The shortage is so severe that the Midwest must import fuel.
The Pittsburgh region receives more than half of its gasoline from the East. If the Midwest can’t fully supply its own needs now, how does it plan to supply all of Western Pennsylvania if the pipeline is reversed? The answer is that it simply would not be able to do so.
Reversing the Laurel Pipeline would render this region susceptible to price spikes and possible shortages. Unplanned refinery outages in the Midwest due to mechanical problems or bad weather have happened in the past and will happen in the future. When these outages have occurred, prices have skyrocketed by up to 70 cents per gallon. This has happened even with eastern supply available to
help buffer price increases. Without eastern supply, prices could go up by $1 or more per gallon and stay there for longer periods of time. This would be devastating for Pennsylvania businesses, jobs, working families and our transportation infrastructure.
For more than a halfcentury, the current system has served Pennsylvania well. If Buckeye Partners gets its way, reversing the flow of the Laurel Pipeline will mean higher gasoline prices, potential price spikes and shortages for consumers. The facts speak for themselves.