U.S. report backs Steelworker warning on oil supply

WASHINGTON - A new federal report confirms what the Steelworkers' oil workers' sector has warned of for weeks: Closure of two Philadelphia-area refineries, and the pending closure of a third which would cut in half the amount of refined petroleum products available to the Northeast.

Now, the Steelworkers say, it's up to the government to do something about it.

The Feb. 28 Energy Information Administration report shows regional refining capacity was cut by 363,000 barrels a day when ConocoPhillips shut its Trainer, Pa., refinery last September and Sunoco closed its Marcus Hook refinery in December.

The area will lose 335,000 more daily barrels if Sunoco closes its Philly refinery, EIA reports. Sunoco says if it can't find a buyer, it will close the plant by July. Together, the three refineries provided just over half of the 1.37 million barrels of daily refining capacity available to the area. Together, they also employed 2,500 Steelworkers.

The situation wasn't helped when the Hovensa refinery in the U.S. Virgin Islands, jointly owned by Amerada Hess and Venezuela's national oil company, was converted to an oil storage facility, then closed at the end of February, EIA added. It had sent products to the Northeast. Its closure cost 1,700 more Steelworker jobs, USW added.

"If Sunoco's Philadelphia refinery closes in Jul. 2012 as announced, the Northeast could be significantly impacted as the additional loss of volumes and reduced access to distribution systems may create temporary, localized shortfalls and associated price surges," EIA concludes.

"Adequate refining capacity is available outside of the East Coast to replace the lost capacity, but logistical constraints on the delivery of product to certain areas within Northeast in the short-term may present significant challenges," its report warned. Those challenges: Pipelines from the Gulf Coast to the Northeast are at capacity and there aren't enough U.S.-flagged oil tankers available - even if they could be leased right now, which they can't - to handle the bigger load.

The worst impact would be in ultra-low-sulfur diesel fuel. All Philly refineries, including those that are closing, supply 60 percent of the Northeast's needs for that, along with 45 percent of its heating oil and 40 percent of its gasoline.

Loss of their jobs, plus this gloomy news, led USW to reiterate the warnings it gave when several hundred USW-represented oil workers lobbied Congress and the Obama administration in mid-February to step in.

"This report reinforces everything we have been saying for the past six months about the devastating effect the closure of the Philly oil refineries will have on oil workers, energy markets, and consumers throughout the Northeast," said Steelworkers President Leo Gerard in announcing the EIA report's release. "It is time for Congress and the administration to act. It is time for Pennsylvania to step up to the plate. It is late in the game, but if all parties work together this disaster still can be averted."

USW Local 10-234 President Denis Stephano, whose local represents the now-laid-off Trainer refinery workers, noted refinery capacity in the area has been dropping for a decade. "It has finally reached a critical point where we know enough is enough and the market cannot be properly served anymore," he commented about the report.

Local 10-1 President Jim Savage, who represents the still-open-but-threatened Philadelphia refinery workers, cited the "painful human cost in Philadelphia and the surrounding counties" of the closures. "More than 1,000 of our members have worked at these three refineries, and there are at least 1,000 more who have worked on a regular basis inside the fence on a contract basis," he explained.

And USW District Director John DeFazio said at least ten more outside jobs per each refinery job depend on the plants staying open. Those jobs run the gamut from suppliers to the refineries to tanker truck drivers to lunch counter employees who serve the refinery workers. "That's at least 20,000 decent, middle class jobs that will be gone forever, if these closures are allowed to stand," he said.

The Steelworkers and their allies marched to Pennsylvania GOP Gov. Tom Corbett's Philadelphia office in February, demanding he act. They've had no reply. The state attorney general may probe the refineries' books. The workers then hit Congress and the Energy Department. The agency told them, in the meetings, its hands are tied.

But USW has a few ideas for action. One is to have EIA take the issue over to the Obama White House and raise hell. They've already gotten a promise of a congressional hearing on the closures, on national security grounds, due to the imminent loss of jet fuel.

Another idea came from USW oil sector spokeswoman Lynne Baker. She noted the major oil companies are getting out of refining. They claim oil refineries, unlike exploration, have small profit margins or lose money. "We'll keep pushing Congress about this," Baker says. "It's difficult because the government isn't in the business of telling the private sector to keep plants open. Maybe they should give tax incentives to the refineries" rather than for drilling. "That's where we need them."

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    Posted by Coondawg, 02/29/2012 6:54pm (3 years ago)

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