Storm clouds are gathering once again over US Atlantic Coast refineries, but unlike a few years ago when it was high oil prices causing a problem, this time the threat is coming from the Midwest. Hemmed in by geography, Midwestern refiners are looking east as a logical place to sell their gasoline and diesel. The proposed partial reversal of Buckeye’s Laurel Pipeline, a 350-mile line now carrying gasoline and diesel from Philadelphia-area refineries west to Pittsburgh, would offer Midwest refiners easier access to the East Coast market. But the proposal to reverse a portion of the pipeline by Q3 2018 does not bode well for US Atlantic Coast refineries. Four out of five of these refineries nestle close to Philadelphia and depend on the Laurel flowing to the west as an outlet for their output. Without the flow westward some of those Philadelphia area refiners could be hard pressed to remain in business. Earlier this decade, USAC refiners faced a similar threat of extinction. Between 2010 and 2013, USAC refinery capacity was reduced by about one-third, or over 500,000 b/d, to the current 1.28 million b/d as the price of crude rose more quickly than the price of gasoline and
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Source: CTRM Center