Lawmakers point to DOE analysis that shows possible shuttering, idling of Pennsylvania refineries could lead to heating fuel shortages, prices spikes for 6 million Northeast families

WASHINGTON (December 27, 2011) – Concerned that new analysis by the Department of Energy (DOE) shows that decisions by ConocoPhillips and Sunoco to idle or shutter completely three refineries in Pennsylvania could cause shortages and prices spikes of home heating oil for nearly 6 million families in the Northeast region, Representatives Edward J. Markey (D-Mass.), Robert A. Brady (D-Pa.), and Allyson Y. Schwartz (D-Pa.) today called on DOE Secretary Steven Chu to increase the size of the Northeast Home Heating Oil Reserve to two million barrels.

A new report from DOE’s Energy Information Administration (EIA) released today concluded that the decisions by the two oil companies, in part, “could result in spot shortages with price spikes for different fuels in different locations” and “increase price volatility.” Reps. Markey, Brady and Henry A. Waxman (D-Calif.) released the report earlier today after querying EIA in November with concerns that shuttering refining capacity could lead to tighter supply and increased prices for consumers in the region. The three refineries comprise over 50 percent of the total refining capacity in the Northeast.

“Given the already high prices consumers are facing this winter, DOE must ensure that consumers are safeguarded from spot shortages and higher prices resulting from these oil companies reducing refining capacity,” write the lawmakers in the letter to Secretary Chu.

A copy of the letter to DOE can be found below.

Created by Rep. Markey in 2000 as part of the Energy Policy and Conservation Act, the Northeast Home Heating Oil Reserve originally was established at a size of two million barrels in order to protect consumers in the event of a supply disruption during severe weather. The reserve has recently undergone a reduction to one million barrels as part of the conversion of the reserve to cleaner burning ultra-low sulfur fuel.  

The lawmakers also sent a letter to the Federal Trade Commission (FTC) calling attention to the new analysis in follow-up to a letter from Reps. Markey and Brady asking the Commission to investigate whether the shuttering of these refineries by ConocoPhillips and Sunoco could be anti-competitive and adversely impact consumers.
 
“We are extremely concerned that the decisions by these two oil companies to remove such a substantial amount of the Northeast’s refining capacity could adversely impact consumers and we request that the FTC examine the enclosed EIA analysis as part of its ongoing review of these oil company actions, consistent with the FTC’s responsibilities to protect consumers from anticompetitive or other improper practices,” write the lawmakers in the letter to the FTC.

A copy of the letter to the FTC can be found below.

The EIA projects that average household home heating oil expenditures will increase eight percent and reach record highs this winter.