Gas prices may rise sharply if refineries on the East Coast continue to struggle financially. Sunoco has already closed its Marcus Hook refinery near Philadelphia and is trying to sell another facility nearby as a result of losing $1 million a day on its refining businesses, according to CNN.com.
ConocoPhilips closed its Trainer refinery last fall, leaving just seven refineries operating in the Northeast. One of the world's largest refineries, in the U.S. Virgin Islands, also closed in February. This facility shipped thousands of barrels of refined oil to the East Coast each month. The closures could lead to gas shortages and higher prices as additional fuel would have to be transported into the region.
"There are going to be logistical problems getting product into New York," Ben Brockwell, an analyst at the Oil Price Information Service, told CNN. "The people I talk to are expecting shortages from August through the rest of the year."
The closed refineries were struggling in part due to the technology they contained, which restricted the type of oil they could process. The facilities were unable to handle the heavier crude oil that sold for lower rates on the world market. Larger, updated plants along the Gulf Coast are expected to increase their production levels to compensate for the shortage of processed fuel. This should help eventually reduce the spike in gas prices.