The Pennsylvania Public Utility Commission has scheduled a public comment session in Harrisburg on Tuesday to gather public input on what could be the best news for gasoline prices in Western Pennsylvania in a very long time. But it’s a contention some dispute.
Buckeye Partners, which owns the Laurel Pipeline, has filed a request with the PUC to switch the flow of the western portion of the 350-mile pipeline that transports gasoline, diesel and jet fuel from Philadelphia-area refineries to Western Pennsylvania.
That reversal, Buckeye says, would allow for cheaper fuel products from Midwestern refineries to be piped into the western half of the Keystone State.
Western Pennsylvania long has been plagued by markedly higher gasoline prices than those across the border and an hour away in Eastern Ohio. The additional supply, if demand remains static, would result in lower prices local, the company says.
But critics are crying “Foul!”
Some Western Pennsylvania businesses – Sheetz and Giant Eagle, primarily – and some elected leaders say the reversal will limit supply (the Laurel Pipeline is the only supplier of East Coast gasoline, they argue), create monopoly conditions and raise prices.
Those companies say they now have the ability to tap gasoline supplies that flow in both directions and can chooses the cheaper product at any given time.
Well, then why is there often such a dramatic price differential between Western Pennsylvania gasoline and that found a relatively short drive away (even when factoring in higher Pennsylvania taxes)?
Additionally, critics see the pipeline reversal as part of a larger plan by Marathon Petroleum to push well past Central Pennsylvania and challenge those Philadelphia-area refineries on their home turf.
Competition is a bad thing?
Those Eastern Pennsylvania refiners are none too happy to see their market share cut, given they already struggle with reduced capacity. Some of those operations, by the way, have been subsidized by taxpayers.
But Buckeye Partners says an increase in the volume of gasoline that could be piped into Western Pennsylvania will force prices lower. It insists, too, that it can meet the demand for reformulated fuels required in the Pittsburgh area for summer pollution reduction.
State Rep. Eric Nelson, R-Westmoreland, told the Tribune-Review he believes a company should be allowed to do what it sees as a good business decision.
“The government shouldn’t be restricting the business,” he told the Trib. “The Legislature in the past has restricted Western Pennsylvania by mandating this summer gas issue. That results in higher prices for our residents.”
As do state taxes that, when combined with the federal impost, leave the Keystone State with one of the highest gas taxes in the nation.
The PUC has purview over this matter as part of the commonwealth regulatory regime. It’s up to the commission to separate fact from rhetoric to determine what would be in the best interest of consumers. And while one monopoly should not be ended to create another, state restriction of competition never is good for consumers.
Colin McNickle is a senior fellow and media specialist at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).
