PUC judge advises nixing pipeline reversal

An administrative law judge has ruled against a pipeline owner that wanted to reverse the flow along part of a gasoline pipeline in Pennsylvania, noting the reversal is not likely to benefit consumers.

The ruling is simply a recommendation, meaning it must be approved, rejected or modified by Pennsylvania’s Public Utility Commission. There is no statutory timeline for a decision, according to Nils Hagen-Frederiksen, a PUC spokesman.

Nonetheless, it is a blow to Buckeye Partners, which has been seeking the pipeline reversal since 2016

Buckeye wants to change the flow on the western half of the Laurel Pipe Line, which carries gasoline from refineries in Philadelphia to end users in Pittsburgh. On the western portion of the pipeline, gasoline would instead flow west to a point near Altoona.

“While we are still reviewing the decision, and we appreciate the administrative law judge’s consideration of our proposal which will create important benefits for Pennsylvania consumers, we respectfully disagree with her conclusion,” Bill Hollis, a senior vice president at Buckeye, said in a statement.

Buckeye has argued that the reversal will allow cheaper gasoline from Midwestern refiners to reach more consumers in Pennsylvania, a point the company reiterated Thursday.

“The facts clearly demonstrate that our market-driven project will enhance competition and lead to lower fuel prices for families and communities while improving energy security, all wins for the Commonwealth,” Hollis said in his statement. “These facts continue to be broadly echoed by business and labor organizations, elected officials as well as independent experts and academics. We believe the commission’s objective review of these facts should lead to the approval of the project, which will benefit Pennsylvania consumers and move the Commonwealth forward.”

Critics have said the move will turn Pittsburgh into a captive market for those same Midwestern refiners, which will not be able to meet the demand, thereby driving up prices.

In a statement, a coalition opposing the reversal, called Deny Buckeye, praised the judge’s recommendation. Coalition members include convenience-store chain Sheetz, grocer Giant Eagle, Gulf and other refinery companies from southeastern Pennsylvania

“As major fuel retailers to countless Pennsylvania consumers, coalition members would be the first in line for any idea that reduces the price at the pump,” said the statement from Deny Buckeye. “The Buckeye proposal would have the opposite effect.”

The PUC’s administrative law judge, Eranda Vero, appeared to side with the critics.

In a 215-page ruling based on extensive testimony and evidence from both sides, she expressed skepticism about the consumer benefits of the proposed reversal.

“The crucial premise on which Laurel builds its ‘public benefit’ argument is that the Midwestern refineries have access to crude oil from domestic and Canadian sources (Bakken and Western Canadian Select), which are cheaper and will continue to be cheaper than the global-Brent crude oil the Eastern refineries rely on for production,” Vero wrote. “Yet, it must be noted that despite bearing the burden of proof, no Laurel witness provided a study supporting their claims that Midwest supply is the lowest cost supply source.”

Vero also weighed in on the question of whether state or federal regulators had jurisdiction over the pipeline, coming down on the side of state jurisdiction.

(Editor’s note: This story has been updated from its original version to include comments from Deny Buckeye.)

Joel Berg
Joel Berg is editor of the Central Penn Business Journal. Born in Philadelphia, raised in Northern Virginia and now living in York, he's a graduate of Franklin & Marshall College and the University of Maryland. Have a question or story idea? Email him at jberg@cpbj.com.

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