US gasoline prices jumped after a large fire and explosions were reported at the Philadelphia Energy Solutions oil refinery, the largest on the Atlantic coast.

Wholesale gasoline futures for delivery into New York harbour next month were up 3.9 per cent on Friday at $1.86 a gallon, outstripping gains in crude oil, which was up 0.9 per cent.

The refinery dates to Pennsylvania’s 19th-century oil boom and lies less than a mile from residential areas of South Philadelphia. City emergency responders reported a vat of butane had exploded on-site shortly after 4am on Friday, but reported no injuries. The company did not respond to requests for comment.

Local television said a series of large explosions shook buildings as far away as southern New Jersey, across the Delaware river. The NBC broadcast affiliate said thick plumes of smoke were covering large parts of “centre city and South Philadelphia”.

The river basin between Pennsylvania and New Jersey is the main oil refining centre on the US east coast and an important market for crude oil produced abroad. The Philadelphia refinery, which is able to process as much as 335,000 barrels of oil a day, imports large amounts of crude from North Sea and west African suppliers, including Norway, the UK and Nigeria, government data show.

PES previously spent $130m to build a railway yard to unload oil trains from the Bakken oil formation in North Dakota, but shipments from the Midwest to the east coast have fallen after new pipelines made it cheaper to send barrels to competing refineries in the central US.

READ ALSO  Vaccine delays in poorer nations threaten rich world’s economy

The refineries in the greater Philadelphia region — including PES, PBF Energy’s Paulsboro, New Jersey plant and the Trainer refinery owned by a subsidiary of Delta Air Lines — supply large eastern gasoline, diesel and jet fuel markets including Philadelphia, Washington and New York City.

The Philadelphia refinery was almost shut before being saved in 2012 by the private equity investor Carlyle Group, which formed a joint venture with former owner Sunoco, helped by tax and regulatory relief and $25m in grants from Pennsylvania.

The PES holding company then filed for bankruptcy protection in 2018, enabling it to shed costly ethanol blending obligations in a controversial settlement with regulators.

The parent company emerged from bankruptcy in August 2018 controlled by investors Credit Suisse Asset Management and Bardin Hill, with the prior joint venture owners retaining minority stakes.*

*This story has been amended to correct the names of the refinery’s current owners.

Via Financial Times