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3/5/2012 6:45:00 AM Write a Letter to the Editor Write a letter to the Editor

ULSD Supply Woes Loom

DOE Warns Refinery Closing Threatens Northeast

Mike Mergen/Bloomberg News
By Greg Johnson, Staff Reporter

This story appears in the March 5 print edition of Transport Topics. Click here to subscribe today.

Truckers in the Northeast soon could find ultra-low-sulfur-diesel fuel in short supply and more expensive if Sunoco Inc. proceeds with its plan to close its Philadelphia refinery in July, the U.S. Energy Information Administration warned last month.

Editor’s note: Diesel rose 4.3¢ to $4.094/gal., DOE reported March 5.

Sunoco, looking for a buyer for the refinery, has said it will close the 330,000-barrel-per-day facility if none is found.

If Sunoco shutters the plant, it would be the third refinery closing in southeast Pennsylvania since September — representing 50% of the total refining capacity in the Northeast — said the agency, which is part of the U.S. Department of Energy.

“The additional loss of volumes and reduced access to distribution systems may create temporary, localized shortfalls and associated price surges,” EIA said in its report.

Northeast refineries usually have supplied about 60% of the ultra-low-sulfur-diesel fuel consumed in the region. The rest comes from Gulf Coast refineries and imports, EIA said.

ULSD also is refined in the Gulf and Midwest, but because there’s not much excess pipeline capacity to move the product, fuel to the Northeast might have to be shipped by rail, said John Felmy, chief economist at the American Petroleum Institute.

If Sunoco’s Philadelphia refinery shuts down, suppliers may need to find 180,000 more barrels per day of low-sulfur diesel by 2013, the agency said. And logistical constraints on product delivery to certain areas of the Northeast may present additional challenges, EIA warned.

Sunoco said in September that it was exiting the refining business because of rising costs and low profit margins.

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