Gasoline Prices Jump 3.4% After Refinery Explosion In Philadelphia

A massive fire broke out in the refinery complex of Philadelphia Energy Solutions in South Philadelphia in the wee hours of Friday. The refinery fire shot up the U.S gasoline prices substantially.

It was the largest refinery on the East Coast. Reports said gasoline prices have jumped an average 3.4 percent.

The fire broke out around 4 a.m. It was reportedly caused by an explosion on a vat of butane inside the complex, according to Deputy Fire Commissioner Craig Murphy.

Philadelphia Energy Solutions is a subsidiary of Energy Transfer Partners. The 153-year old complex is housed on a 1,300-acre complex with a processing capacity of 335,000 barrels a day.

The PES is a joint venture between Sunoco and Carlyle Group.

According to eyewitnesses, the sky turned bright orange as the plumes of fire jumped. Residents were jolted from their sleep by the sound of shaking homes and disturbances were felt by people living miles away.

The Philadelphia Fire department said the fire has been contained and work is on to bring it under control. So far no injuries have been reported.

“It is pretty much contained to that vat right now,” Murphy added.

The city’s Office of Emergency Management informed that part of the I-76 Expressway and the Platt Bridge in the city have been blocked after the fire.

Philadelphia Energy Solutions spokeswoman Cherice Corely said that “authorities are working to account for all of the personnel.”

The fire department is now working to cool off the surrounding areas to avoid the fire from spreading further.

Rising prices and peaking demand from summer driving

The fuel outage in the aftermath of the refinery fire will surely impact prices and skewed supply will worsen the situation as summer driving demand is peaking.

Of late, the demand for gasoline has skyrocketed after the U.S. summer driving season moved into high gear.

The gasoline demand hit a record high last week, according to government data. Drivers in the U.S. consumed a record 9.9928 million barrels a day last week, up from the 9.3 MPD a year ago.

John Kilduff of Again Capital said the fire mishap will cause a serious outage and affect the east coast hard.

“There’s a cushion for drivers because we’re well supplied. But if there’s major damage, it’s going to change that dynamic dramatically,” he cautioned.

Uncertainty is up as the gasoline market used to be well fed from the Philadelphia refinery as a big source of fuel in the east coast.