Oil refinery explosion, Iran tensions may mean pricey fuel
After explosion at oil refinery, experts fear fuel may rise in price
After a Thursday explosion at the largest oil refinery on the East Coast coupled with new tensions with Iran, analysts warned that retail fuel prices could begin to creep back up in advance of the Independence day holiday week.
Only days before, AAA had pointed out what it termed an “unnatural” drop in fuel prices nationally in the weeks after the Memorial Day weekend, driven by both increased domestic production and greater imports.
Experts said that could change after the Thursday conflagration at a refinery complex on the Schuykill River south of Philadelphia, with crews still working to contain the blaze and assess the damage as of Friday.
Operated by the Philadelphia Energy Solutions joint venture acquired last year by Credit Suisse and Bardin Hill as part of a bankruptcy restructuring, the PES facility processes is capable of refining some 14 millions of gas daily, destined largely for fuel stations in the mid-Atlantic region.
Crude oil prices were already trending upward after last week’s attacks on two oil tankers in the Persian Gulf followed by Iran downing a U.S. drone, with President Trump reportedly having not ruled out a military reprisal as his administration gathers information.
On Friday, a Houstonbased analyst told CNBC that while the U.S. market has added sufficient crude oil stocks of late to withstand any temporary disruption as a result of the Philadelphia fire, market psychology also plays a factor in the setting of prices for oil and futures.
“The U.S. refinery system is probably better positioned to handle a disruption of this sort better than it has been in years past,” said IAF Advisors research director Kyle Cooper on CNBC’s “Power Lunch” program. “The world is better equipped to handle (an Iran) disruption than it has been in the past, but ... keep in mind, you have to separate price reaction from what physically going to happen — clearly there is a huge fear, and that’s very real.”
A 5-cent swing in prices at the pump in any given week can add or subtract more than $1.4 million from the wallets of Connecticut drivers and businesses, according to Energy Information Administration estimates of the state consuming nearly 29 million gallons of gas and diesel fuel weekly in 2017, the most recent year on record.
As of Thursday, AAA calculated average gas prices in southwestern Connecticut that were 13 cents below their levels of a month earlier, from $2.94 in Fairfield County to $2.81 in the New Haven area and $2.78 in Hartford.
As of Friday afternoon, a Citgo station on River Road in Shelton had the lowest price in the southwestern corner of the state among standard pit stops, at $2.51 a gallon as reported by GasBuddy. Members of BJ’s and Costco were getting the cheapest gas to be found, at $2.49 a gallon at the Brookfield locations of the warehouse clubs, at $2.49.