Cheap oil won't last, says Philly refinery chief Rinaldi
But a city "energy hub" should make money whether prices rise or fall
Enjoy sub-$2 gasoline and other cheap fuel prices while you can, Philip Rinaldi, chief executive at Philadelphia Energy Solutions, which runs the former Sunoco oil refinery and fuel storage and shipment complex in South Philadelphia, told Greater Philadelphia Chamber of Commerce members at their yearly economic forecast breakfast today.
"The economy will have an opportunity to take advantage of this cheap oil for awhile," Rinaldi said, as oil fell to around $44 a barrel, less than half its peak price from a few years back. "How long? I wouldn't bet on more than a year."
Like a Wall Street trader, Philadelphia is positioned to benefit whether prices go up or down, Rinaldi added. He's chief cheerleader in the campaign to make the region an "energy hub" where Marcellus Shale gas and fuels are shipped, stored and exported or sold to users around the world -- "redistributed," as Rinaldi put it.
Why are oil prices in particular so up-and-down? "The fundamentals have to do with consumption," not just supply, Rinaldi said. Though U.S. and Western European use is falling, global oil demand is still heading north, thanks to growth in China and India. And "low prices will stimulate demand," driving prices higher again.
The busy markets in commodity speculation also goes far to explain the volatility, Rinaldi added: "For every physical barrel of oil that (is sold), there are 20 or 30 barrels of oil that are traded as pure financial instruments."
If Philadelphia (rather than, say, the Baltimore area) becomes the great terminal for Marcellus Shale and Utica Shale fuels, how will Philadelphians benefit? "We need to create new consumers of that gas," Rinaldi said.
He said upstate residents in the gas extraction areas get it, and job-hungry Philadelphians seem to understand why piping, training and barging fuel through the city is a good thing (perhaps acknowledging that it's Chester County and other well-off suburban areas, between the upstate wells and the riverside tanks, that object the most to new pipelines and other energy construction).
If more energy-dependent industries return to the Delaware Valley to be near cheap fuel, Rinaldi says it will be "great for middle-class famillies" and for new, "long and sticky" industrial jobs.