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Update -BP Refinery Strike Closures May boost Competitors Margins

Home Forums Refining Community Refinery News Update – Refinery National Oil Contracts set expire Midnight Sat Update -BP Refinery Strike Closures May boost Competitors Margins

#6292

Charles Randall
Participant

BPs Possible Refinery Closures May Boost Competitors Margins

By Jordan Burke
     Jan. 29, 2009 (Bloomberg)
BP Plcs decision to shut four U.S.
refineries if the United Steelworkers decide to strike over
contract negotiations may raise regional fuel prices, benefiting
competitors such as Exxon Mobil Corp. and Citgo Petroleum Corp.
     If BP announces that this weekend, the market would surge
10 to 15 cents higher
, said Dominick Chirichella, a senior
partner at the Energy Management Institute in New York, in a
telephone interview. If they do shut them down, you will get
an overreaction to it. Refined product prices would rise, and
crude prices would fall.
     Refiners and the union are negotiating a labor contract
this week that affects about 30,000 employees, or 58 percent of
U.S. oil workers.
If a strike is called, BP said it will shutter
plants in Whiting, Indiana; Texas City, Texas; Carson,
California; and Toledo, Ohio.
     If BP shut its Whiting, Illinois, Chicago-area refining
capacity would drop by 50 percent
, according to Energy
Department data. The closure may potentially boost processing
margins at Citgos Lemont, Illinois, plant and Exxons Joliet,
Illinois facility, Chirichella said.
     BP chose not to train replacement workers because we have
been working closely with our unions to improve the safety and
operations at our facilities, said Scott Dean, a BP spokesman,
in a telephone interview.
     A shutdown of the Texas City plant would reduce area
processing capacity by 62 percent.
Closures of plants in Carson
and Toledo would cut area processing capacity by 25 percent and
36 percent respectively, according to Energy Department data.
     The price of regular gasoline for prompt delivery in
Chicago rose 6.44 cents, or 5.5 percent, to $1.2425 a gallon at
12:45 p.m., according to data compiled by Bloomberg.

–Editor: Charles Siler, Robin Saponar

 

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