A recent report in the Financial Times noted that Sunoco closed two oil refineries in Pennsylvania and is poised to close another.
Mark Huffman, a writer for www.ConsumerAffairs.com explained the economic predicament of some refineries like this:
"The price of oil has soared over $100 a barrel, making it more expensive to refine a gallon of gasoline. That gallon of gas is sold to a retailer, who adds in a small profit and sells it to a consumer for around $4. But because it's so expensive, the consumer doesn't buy as many gallons as she did when gasoline sold for $3 a gallon. So the refinery is selling fewer gallons, on which the profit margin is very small. As sales keep dropping, the refinery isn't making enough profit to justify keeping the refinery open."
Huffman also points out the East Coast refineries have traditionally purchased oil from overseas, which is now much more expensive than crude oil pumped in the U.S., mostly in Texas.
With the national average price of gasoline closing in on $4 a gallon, you might expect the oil refinery business to be booming. It isn't.
Tuesday's national average price for regular unleaded gasoline is $3.89/gallon.
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