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June 24, 2019

Philly refinery explosion set to drive up holiday gas prices in Northeast U.S.

Economy Gas Prices
Gas Pump Refinery EXP Source/

Gas prices in the northeast U.S. will rise in the aftermath of an explosion at the Philadelphia Energy Solutions oil refinery on June 21, 2019. Consumers should expect to see the increase as they prepare for Fourth of July travel plans.

The immediate danger of last week's refinery explosion in Southwest Philadelphia has been contained after the fire was isolated and extinguished this weekend.

In the weeks ahead, drivers in the Northeast U.S. should expect pay the consequences at the gas pump.

Philadelphia Energy Solutions, where the explosion occurred overnight on June 21, is the largest oil refinery on the East Coast.

RELATED: Refinery explosion poses no 'immediate danger' to Philly residents, city health dept says

Economic forecasters say the summer shortage ahead has already set off a chain reaction. Oil futures jumped 3.9% in the wake of the fire as supply is expected to fall by as much as 4.2 million gallons of gas per day, according to Bloomberg.

That number would account for about 2.7% of demand on the East Coast, meaning prices will have to rise in order to attract supply from Europe and elsewhere in the U.S.

An investigation into the explosion was launched Monday, Philadelphia officials said. The initial explanation was that a leak in an alkylation unit used to make high-octane gasoline at the refinery's Girard Point plant led to a series of explosions. All of the plant's boilers then stopped as the fire continued through most of the weekend.

Pump prices had fallen 20 cents to a national average of $2.67 in the month from early May. As the shortage begins to impact retailers — just in time for the long Fourth of July weekend — consumers should be prepared to see those prices rise again.