Feb 2, 2012:

Even as gasoline prices are surging, a big restructuring is underway in some parts of the U.S. refining business. East Coast  refineries often use imported oil, which is  priced at the much  higher Brent Crude level (more than $125 a barrel nowadays.)  And actual demand for fuel has been slowing in the face of a tepid economy, and the rising use of corn-based ethanol and soy-based diesel. All of this adds up to tough economics for refineries on the East  Coast.  Sunoco Inc. has announced it’s trying to sell its massive 335,000 barrel-a-day refinery in Philadelphia. It plans to  permanently close its 178,000-barrel-a-day refinery in Marcus Hook, Penn., after failing to find a buyer. Meanwhile, Sunoco doesn’t  even plan to remain in the refining business, as it charts its future  instead as a logistics and retailing business for fuel.

Also among the restructuring of U.S. refineries, ConocoPhillips has decommissioned its refinery in Trainer, Penn. And in January,  Hess Corp.  and Venezuela’s state-run oil company PVDSA set plans to shut down the Hovensa LLC refinery in St. Croix, which serves the East coast. Not all refineries in the region have been idled, however. PBF, a relatively new refining company that plans to hold an initial public offering, has restarted the former Valero Energy Corp. refinery in Delaware City, Del. Profit margins are much better in the Midwest, where refiners such as Marathon Petroleum Corp. have access to much cheaper crude from North America available for about  $15 a barrel less than Brent. The U.S. Energy Information Administration warned in a study released this week that the refinery shutdowns could stoke further fuel price increases, particularly for ultra-low diesel fuel.

And union officials are complaining about the loss of jobs.  Jim Savage, president of Local 10-1 of the United Steel Workers union said this week  1,000 workers were employed at the Marcus Hook,  Philadelphia and Trainer refineries, plus 1,000 more contractual  workers. The union said as many as 20,000 jobs in total could be  affected by the closure of the refineries. So even as the cost of filling up surges, those additional dollars aren’t helping everyone involved in the gasoline supply chain – especially if you’re a refinery worker in the  Philadelphia area.

By MarketWatch