Customers pump gasoline at a gas station in the Bronx, where gas prices are over $3.00 per gallon, June 1, 2018 in New York. Don Emmert | AFP | Getty Images

The permanent shutdown of the fire-damaged Philadelphia Energy Solutions refining complex could send gasoline prices higher across the U.S., but particularly in the mid-Atlantic region, where they could spike temporarily just around the time drivers fill up for Fourth of July holiday. The refinery was the largest and oldest on the East Coast and accounts for about 27% of that region's refining capacity. The 330,000 barrel a day refinery was closed following explosions and a massive fire last week. Philadelphia Mayor Jim Kenney said he spoke with the CEO and leadership of the company Wednesday morning and confirmed earlier reports that PES intended to close within the next month. "Gasoline futures prices rose 17 cents a gallon since the explosion last week. That's going to be passed along to the consumer," said Andrew Lipow, president of Lipow Oil Associates. "I would expect that the national average will halt its decline and start rising by 5 to 10 cents a gallon over the next couple weeks in response to loss of the refinery. The loss of refinery production is going to be made up by additional imports." Lipow said the price in the Philadelphia-New York area could rise by 10 cents per gallon or more. "Prices are still going to be less than last year for the July 4th holiday but they will be rising through July and August," Lipow said.

Price rise should be contained

Another factor that could impact gas prices this summer are geopolitical risks. That would include rising tensions between the U.S. and Iran that helped drive oil prices up more than 10% this month. RBOB gasoline futures, representing the price of gasoline in New York Harbor, jumped 4.2% Wednesday, to $1.92 per gallon, partly on reports of the closing. Gasoline futures were also higher, as the U.S. gasoline supply declined by nearly 1 million barrels in the past week, while analysts expected a buildup of nearly 300,000 barrels in the past week. The national average pump price for a gallon of unleaded gasoline was $2.68 per gallon Wednesday, 2 cents higher than on Friday, the day of the explosion, according to AAA. The average price in Pennsylvania, the biggest market for the PES refinery, rose 3 cents since Friday to $2.85 per gallon. Gasoline in New York and New Jersey were fractions of a penny lower, at $2.85 and 2.75, respectively. Even so, Tom Kloza, head of global energy analysis at Oil Price Information Service, said gasoline should not rise much more than 5 cents per gallon nationally and will probably not exceed the average price last year. A year ago, unleaded fuel averaged $2.84 per gallon. A month ago, gas prices were much higher than they are now, at $2.83 per gallon. "I think this presents problems for July and August, but I think everything will be fine. There's enough gasoline that's headed up in the Colonial pipeline, and there's enough stuff coming from Europe. The next couple of days are going to be hit or miss. I think we're going to see gasoline trading up at a modest pace," Kloza said. Stocks of rival refining companies rose; Valero was up 4%, while PBF, which has two refineries in the Philadelphia area, gained 5.2%. Phillips 66, owner of a refinery in Linden, New Jersey, was up 1.4%. "We're restarting the Baytown refinery that Exxon Mobil has, and we have more refining capacity that's coming up on the Gulf Coast. ... It's a feverish spike here for [the futures market] but pretty much every where else prices are lower than they were last year," said Kloza. "We'll probably wobble a bit higher. The world has plenty of gasoline and the world will react."

Potential for 'a wild day'