U.S. Midwest refiners are gearing up to send more gasoline and diesel to East Coast buyers, hoping to fill a void created by refinery closures and cutbacks, but likely to add pressure to regional fuel producers.
Midwest refiners, such as BP and Husky Energy, that process inexpensive Canadian crude are betting on East Coast markets to boost sales and margins. But the move could make it more difficult for PBF Energy to restore production of gasoline, diesel and jet fuel at its Paulsboro, N.J., plant.
“The midwest refining complex is a firehose to the East Coast, which is already drowning in imports,” said Zachary Rogers, senior oil analyst at consultancy Rapidan Energy Group.
Shippers are geared up to transport up to 25,000 barrels per day (bpd) of refined products on the Mariner 1 pipeline from the Midwest as soon as this week, two traders familiar with the matter said. If demand permits, refiners could double that amount, they said.
“We do expect that this service will help to lower overall fuel costs for Pennsylvania residents and business,” said a spokeswoman at Energy Transfer, which operates Mariner 1. Volumes of between 20,000 bpd and 25,000 bpd will begin this month, she said.
