By BEN LEFEBVRE
PBF Energy is operating its refineries in the northeast at
reduced rates, the company said Monday, the latest refiner to
scale back operations as Hurricane Sandy approaches the east
PBF is reducing rates at a 180,000 bpd refinery in
Paulsboro, N.J., and a 190,000 bpdrefinery in Delaware City,
Del., would be at reduced rates but fully staffed during the
hurricane, the company said.
PBF has also closed the docks at the two refineries,
meaning that no crude oil would enter the refinery and no fuel
products would leave, a person familiar with the refinery said.
Analysts with Tudor, Pickering, Holt & Co. estimate that
about two-thirds of refining capacity along the US east
coast is estimated to have been shut down because of Sandy, a
Category 1 hurricane expected to make landfall late Monday in
The drop in production has so far had little effect on
retail prices, however, because short-term demand is expected
to virtually disappear as drivers stay home and flights are
cancelled. The average New York gasoline price for regular is
$3.92/gal, down from $3.93 on Sunday.
But if the storm creates major damages to refineries, or
flooding leads to long-lasting power outages, there could be an
impact on fuel prices, as a wave of refinery closures have eroded the
region's capacity to make fuel and left it with little leeway
in case of an emergency.
Gasoline futures in New York for November delivery traded at
$2.79/gal on the New York Mercantile Exchange, up 9.3 cents
"The worst case scenario has become closer to becoming a
potential reality," said Matt Smith, analyst at Summit Energy.
"It depends on what we see with power outages - all it would
take would one of these big refineries to go down" for gasoline
prices to stay high.
About 6.5% of total US refining capacity is near the region
in Sandy's forecast path, according to the US Energy
On Sunday, Phillips 66 began shutting down its Bayway
refinery in Linden, N.J., and the company said it expects the
refinery to be completely idle by Monday. Phillips 66 fuel
terminals in Riverhead, N.Y. and Tremley Point, N.J. have
already been shut.
"Decisions regarding restarting these operations will be
made once the storm has passed and post-storm assessments have
been completed," the company said.
Philadelphia Energy, which operates a former Sunoco Inc.
refinery in Philadelphia after buying a majority stake in
September, was discussing reducing rates of some production
units at the 330,000 bpd refinery, a person familiar with
the refinery said.
Hess Corp. said Sunday it would reduce rates at its
70,000-bpd refinery in Port Reading, N.J., by an unspecified
Trebor Banstetter, a spokesman for Delta Air Lines, said the
company's 185,000-bpd refinery in Trainer, Pa. continued
to monitor the storm, but it was still running.
"The predicted storm conditions have not reached the
severity levels where they would start shutting down operations
at Trainer," he said.
Dow Jones Newswires