Time for a farewell tour for mothballed refineries? † Editorial

When the PBF oil refinery in Greenwich Township stopped turning out gasoline and other finished petroleum products in late 2020, someone — perhaps the corporation’s media relations types — took pains to say that the facility was not being sold off or dismantled.

Less harsh terms like “mothballed” and other semantics meant little to the 250 employees who lost good jobs right around Christmastime. But, since PBF management apparently wanted everyone to retain the glimmer of possibility that the site might fully reopen, well, what about now?





When PBF idled what’s known as its Paulsboro Refinery, the East Coast was awash in excess refinery capacity because of another shutdown, the COVID-19 pandemic that reduced travel on everything from school buses, to airplanes to commuters in individual cars. Now, the virus is still here, but schools have reopened, travelers are spending freely to satiate pent-up vacation demand and bosses are ordering employees back into brick-and-mortar cubicles.

Then came the boycott of Russian oil by most of the world in the wake of its invasion of Ukraine, and the return of healthy import-export patterns. The result is shortages and gasoline/diesel price spikes like Americans have never seen before.

The reasons are multifaceted. It’s simplistic to blame it all on President Joe Biden and his policies, or even on Vladimir Putin and his policiesOne thing that experts can quantify, however, is that US refining capacity has declined by 1.1 million barrels a day since 2020 started, and by 3.3 million barrels a day worldwide.

It doesn’t take an oil markets expert to see that half the domestic decline occurred right here in the Delaware Valley. PBF Paulsboro’s “sabbatical” erased 180,000 barrels a day. The explosion and fire at the Philadelphia Energy Solutions complex, which actually occurred in 2019, took out a whopping 335,000 barrels a day that will not be coming back.

Trade publications noted in February that PBF was going to resume manufacturing some fuel components at Paulsboro, but was not planning a full restart. The industry cautions in general that restarting mothballed refineries can’t occur with a finger snap. There is maintenance to do, pollution standards to meet (some of them new), and, perhaps most important, a case to be made that the investment required to reopen is worthwhile. Biden says that refiners are making record profits, which should provide some incentive to uncap both drilling rigs and processing facilities. And, he’s likely correct that the refiners are happy with capacity cuts that tend to boost prices while reducing expenses.

An unanswered question is whether renewed operations can be counted on to be profitable for more than the short term. It’s here where Biden’s critics are right in suggesting he makes the Wall Street side of the oil biz nervous. Biden is big on accusing companies of price gouging and getting the United States off of dirty fossil fuels, as other Democrats suggest windfall profit taxes. All are energy sector disincentives, but this country cannot, and should not, recant clean-energy policies and let companies make unlimited, almost untaxed, profits.

Is there a middle ground to incentivize marginal facilities like PBF to ramp up again for a couple of years? If they were aging rockers, we’d call it a farewell tour.

PBF apparently has been smart enough to preserve the condition of its Paulsboro assets. What if recently added regulations were suspended, if a facility produced no more pollution than it did in 2019? What about conditional tax credits that would apply only to reopened legacy sites that guarantee that they’ll stay open at least two or three years?

In 2020, it was suggested here that the fact that Delaware Valley had surrendered nearly all of its oil refinery capacity was a possible national security risk. The issue that actually played out over the past few months is different, but still raises red flags that the entire Northeast is now dependent on fuel from pipelines or that comes in finished from overseas tankers.

Is anyone out there thinking about getting the band back together for a final encore? Governments, suppliers and other stakeholders ought to be talking about it.

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