Tuesday, March 31, 2015

Readers see wider impact of loss of oil refineries

Jobs, direct and indirect, aren't coming back, they say. Regulators still see overcapacity in U.S. market.

Readers see wider impact of loss of oil refineries

Reaction to my Tuesday column about the closing of oil refineries in Delaware and South Jersey elicited more sympathy for the affected workers and their families than relief over cleaner air.

Craig Davies, of Westampton, Burlington County, wrote in an e-mail that he thought I was understating the 950 jobs that Sunoco and Valero said they were eliminating.

“Add the union electricians, pipefitters, carpenters, insulators and laborers that will not have jobs as a result of the closures and you are more than double the 950 figure,” he wrote.

Plus, there will be small businesses, such as restaurants, that will lose income following the shutdowns, Davies said.

He also stressed that new refineries have been built in China, India, the Middle East and Russia - all areas that face fewer environmental restrictions than the ones being closed by Valero and Sunoco here.

True, but such activity also suggests that new demand for oil is coming from those developing regions, not the United States.

The U.S. Energy Information Administration on Tuesday said excess refinery capacity is about 2 million barrels per day. That estimate includes the closure of Sunoco’s 150,000-barrel-per-day Eagle Point refinery, but not Valero’s 190,200-barrel-per-day Delaware City refinery.

The loss of Delaware City makes only a small dent in that overcapacity, which the federal agency ballparks as the equivalent of the output of seven average-sized refineries running at full capacity. In fact, the nation’s refineries are operating at about 85 percent utilization rates, down from the 93 percent they touched during the 2006 boom time.

Refinery work tends to pay very well. A 2002 economic impact study of the Delaware City refinery listed the average salary at $65,813, or 31 percent higher than Delaware’s median income.

One caller described how she was trying to find full-time teaching work now that her husband had lost his job at Valero. Until she does, she’s cutting the household budget, meaning other businesses will be losing sales as she conserves cash.

Plenty of people view oil as a “can’t-lose” business, but we now have hundreds of people involved in it who just lost quite a bit.

Mike Armstrong Inquirer Columnist
About this blog
Mike Armstrong blogs about Philadelphia corporations and business-related topics. Contact him at 215-854-2980. Reach Mike at marmstrong@phillynews.com.

Mike Armstrong Inquirer Columnist
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