Gasoline Surges as Fire Rips Through Philadelphia Refinery

By Barbara Powell and Rachel Graham

Jun 21, 2019

(Bloomberg) —A fire is burning at the Philadelphia Energy Solutions oil refinery, the largest such plant on the U.S. East Coast and the main supplier to the local gasoline market. Futures contracts for the motor fuel gained in New York.The fire still wasn’t under control as of 7 a.m. local time, according to Jim Smith, a supervisor with the Philadelphia Fire Department. PES officials weren’t immediately available to comment when reached by phone before normal business hours.The PES complex, which comprises the Point Breeze and Girard Point plants, can handle a total of 335,000 barrels of crude a day. It is the main supplier of fuel to the New York Harbor market, where inventories of gasoline are currently just below average seasonal levels.

The blaze started after a leak in an alkylation unit triggered explosions, shutting down the Girard Point section, according to people familiar with the plant’s operations. Because it is a chemical fire, it could burn as long as all day, said Smith. He described the event as a three-alarm blaze, adding that 50 units are fighting the fire. No injuries were reported.

The Point Breeze section was already undergoing repairs following a fire in a pump that occurred earlier this month.

“Any shortage ahead of the peak of the summer driving season does not bode well for U.S. consumer pocketbooks,” Joe Brusuelas, Chief Economist at RSM US LLP, said on Twitter. “The video of the early morning explosion is horrific.”

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Gasoline futures for July delivery gained as much as 3.8% on the New York Mercantile Exchange, outpacing an increase in West Texas Intermediate crude. U.S. daily average pump prices have fallen so far this month, according to data from the American Automobile Association.

The fire coincides with the summer driving season, a period of peak fuel consumption in the U.S. Nationwide gasoline demand hit a record last week, nudging closer to 10 million barrels a day, according to government statistics released Wednesday.

Residents and businesses in the area had been asked to stay in their homes out of precaution due a smoke plume have been asked to stay indoors until further notice, the City of Philadelphia Office of Emergency Management said in a tweet. The shelter-in-place request was subsequently lifted for portions of South Philadelphia, it said.

There have been refining operations for 150 years at the site, which has passed through a series of owners, including Chevron Corp. and Sunoco Inc. before being consolidated into Philadelphia Energy Solutions, a partnership formed between Carlyle Group and Energy Transfer Partners’ Sunoco.