CINCINNATI, Oh. (June 26, 2019) The explosion and massive fire at the Philadelphia Energy Solution’s (PES) Philadelphia refinery last week will result in the refinery’s closure, a process likely to begin next month. The announcement of the refinery closure, Ohio’s gas tax increase—set to begin on July 1, and high demand for the summer driving season could mean an increase in gas prices for Ohio drivers.

“The closure of the PES refinery, the largest on the East Coast, along with Ohio’s new gas tax taking effect soon will likely have an impact on gas prices in and around the region,” said Jenifer Moore, AAA spokeswoman. “While it is too early to know how much prices could increase and for how long, motorist in the region will likely continue to see a fluctuation in pump prices– especially leading up to the busy Fourth of July travel period.”

Current and Past Gas Price Averages

PES is the largest refinery on the East Coast, producing 335,000 barrels of crude per day (42 U.S. gallons per barrel). According to their website, in addition to unbranded gasoline, this facility also produces jet fuel and diesel, among other products.

The full impact of the PES refinery closure will depend on market reaction, gasoline demand and supply, as well as crude oil prices.  Summer brings higher demand for gasoline due to peak driving season. This coupled with increased transportation costs (for getting gasoline to stations) will be the biggest factors driving gas prices in the Midwest and potentially neighboring regions.

Gasoline stocks from Canada, neighboring refineries, and the Colonial Pipeline were identified as solutions to help backfill supply following last week’s incident. The long-term viability of this situation is unknown.

In early spring, Governor Mike DeWine signed the new transportation budget increasing Ohio’s gas tax to 10.5 cents per gallon and 19-cents for diesel fuel. This is the first increase on Ohio’s gas tax since 2005.  While it is likely that gas stations have already started to account for the higher gas prices due to the new tax, the closure of the Philadelphia refinery brings the potential for increases at the pump.

However, AAA’s 2019 Gas Price Survey indicates that overall, Americans are changing their perception of what they consider “too expensive.” Now, 50 percent of consumers think paying $3/gallon is too high – an increase of 30-cents from last year when half of consumers reported $2.70 as too expensive.

Survey results indicate that 74% of Americans expect to make lifestyle changes to offset increased pump prices. Of those, nearly a quarter (24 percent) say $2.75 – a price consumers will see for sure at the pump this summer -- as the price that would push them toward changing habits or choices, including:

1. Combining errands or trips - 65% (down from 79% in 2018)
2. Driving less – 60% (down from 73% in 2018)
3. Reducing shopping or dining out – 49% (down from 61% in 2018)
4. Delaying major purchases – 43% (down from 50% in 2018)
5. Driving a more fuel efficient vehicle – 35% (down from 46% in 2018)

AAA will continue to monitor the situation and provide motorists with any updates regarding the impact on summer gas prices.

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AAA provides automotive, travel, and insurance services to 59 million members nationwide and nearly two and a half million members in Ohio.  AAA advocates for the safety and mobility of its members and has been committed to outstanding road service for more than 100 years.  AAA is a non-stock, non-profit corporation working on behalf of motorists, who can now map a route, find local gas prices, discover discounts, book a hotel, and track their roadside assistance service with the AAA Mobile app (AAA.com/mobile) for iPhone, iPad and Android.  For more information, visit www.AAA.com.