Reps. Cheer Bipartisanship That Saved Philadelphia Refinery

A lot of outside forces came together to save the Philadelphia Sunoco refinery.

Sunoco’s suffering at its Philadelphia refinery threatened to shut its doors, which prompted a flurry of activity from union, business and government sectors. Politicians all the way up to the White House got involved, fearing layoffs and a rise in gas prices should the refinery fail.

Rep. Bob Brady (D-Delaware) warned that the effects of the refinery closing would be painful and widespread:

“This plant is the largest refinery on the East Coast, processing 330,000 barrels of crude oil per day. Its loss would have had a devastating effect on home heating oil supplies in our area next winter. Studies have shown that the plant indirectly supports 10,500 jobs in our state and 24,000 across the United States. It has an estimated $11.2 billion economic impact on the Pennsylvania economy, generating $460 million in direct and indirect taxes here. We cannot overstate how deep a loss this would be to regional manufacturing, especially given the continuing sluggishness in the economy.”

The Philadelphia refinery currently employs about 850 people.

Due to the rising price of imported crude oil, the refinery has been facing difficulties turning a profit, Bloomberg Businessweek says.

Part of this is because the price of foreign oil, once only a few dollars more than domestic, is now $13 higher – and reached a high of $27 within the past year.

At one point last year, the Philadelphia refinery, along with Sunoco’s smaller and now-shuttered Marcus Hook facility, were losing Sunoco more than $1 million a day, Sunoco Chief Executive Brian MacDonald told the Wall Street Journal in an interview.

But thanks to a joint venture deal between the private equity firm The Carlyle Group and Sunoco, the plant will stay open. The Carlyle Group will take over operation of the refinery, and Sunoco will retain a minority interest.

In addition to saving the jobs of the refinery’s current workers, the deal calls for the plant to be upgraded, creating an expected 200 jobs.

One such update includes building a high velocity train to import cheaper oil from North Dakota’s Bakken refinery, a move that Bloomberg Businessweek saied will involve “substantial investment in the [Philadelphia] facility.”

Another provision calls for millions of dollars in state taxpayer subsidies.

The refinery will also start using natural gas from the Marcellus Shale formation located beneath Pennsylvania, refine a larger percentage of ultra-low-sulfur diesel, improve the efficiency of its refining and reduce emissions, waste and reliance on foreign oil.

Chief Executive MacDonald told Bloomberg he was satisfied with the deal. “This is the best possible outcome for everyone involved,” he said. “Existing jobs will be saved, new jobs will be created and new business opportunities will be given the chance to develop.”

Reps. Brady and Patrick Meehan (R-Delaware) both cheered the negotiation’s outcome, and both praised the collaboration of “labor, business and government.”

Brady had warm words for all involved, noting the bipartisan cooperation, and anticipated the many new jobs he expects the refinery to produce. He thanked everyone from the United Steelworkers and the Carlyle group up through the ranks of government: Phila Mayor Michael Nutter, Gov. Corbett and President Obama:

“I want to thank this unselfish team, that worked so hard and so quietly for so long to get this deal done…The best part of this deal is that we’re not just saving 850 jobs. We’re laying the groundwork for thousands of construction jobs, permanent refinery jobs and all the other jobs related to the suppliers and contractors who work with this plant.”

Rep. Meehan was particularly enthused about tapping into Pennsylvania-based oil, the good news for the refinery’s workers and the precedent of collaboration:

“The new venture has a far-reaching vision to refine oil and take advantage of the shale gas resources we have here in Pennsylvania. This is a vision that can grow and thrive well into the future. This is also an example of how tough public policy challenges can and should be addressed.”

It seemed that everyone was a winner in the negotiations that saved the refinery, and United Steelworkers President Leo Gerard championed labor’s involvement.

“This wouldn’t have happened were there not a union there willing to fight for this facility,” he said.

5 Responses

  1. Delco Observer. Pease pay attention. If this was a Bain Capital Project, and it were somehow to fall through, you’re party would be crying about how private equity is bad and capitalism is the downfall of our country. Now, in this case, with 700 union jobs at stake, Obama is engaged and he cares about the industry? Bullshit. He cares about Bob Brady being able to tell his union buddys he got something accomplished so when the next big vote comes up bob brady is a vocal supporter.

  2. For those who don’t care who gets the credit, the important thing is that a lot of political officials and corporate leaders set aside their ideology to accomplish something for the common good. It’s about time.

  3. It wasn’t the Obama Administration that has been fighting to keep these locations productive. It has been the Commonwealth’s Corbett Administration that has been sitting down with Union Representatives and the private sector.
    Don’t try to give credit for this success anywhere other than where it belongs. The bi-partisan efforts of the legislature and the Corbett Administration along side hard working Pennsylvanians. Not the Obama Administration.

  4. Amazing this could happen in Philadelphia and in Delco at a time when all republicans are saying that the Obama Administration is the most hostile to this industry and adopting regulations that are killing the industry…Guess Mittens and Pat Meehan and the rest of the boys will need to get that straightened out.

  5. Let’s here it for PRIVATE EQUITY!!! Bob Brady cheers this oil refinery plant staying open??? Better read your party platform dope. OK Bob, waiting on your endorsement of Mitt Romney. Another thing Congressman Brady, call on your party to stop the attacks on private equity and capitalism!!

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