August 22, 2012
After experiencing a series of financial setbacks, Sunoco, Inc. was planning to close their refinery in Philadelphia. As reported in The Wall Street Journal, the planned closure put 850 union jobs at risk and could have caused a spike in east coast gas prices. After meeting with Sunoco officials, the Obama Administration’s goal, “was to protect consumers from higher prices at the pump and keep people from losing their jobs,” said White House spokesman Clark Stevens in the article.
That’s where the Obama Administration turned to private equity firm The Carlyle Group. Working with government officials, including Gene Sperling, director of President Obama’s National Economic Council, and Pennsylvania Governor Tom Corbett, The Carlyle Group acquired a two-thirds stake in the Philadelphia refiner, invested $200 million to upgrade the facility; saving jobs and preventing a spike in fuel prices consumers in the process.
Governor Corbett said that the biggest lesson learned from the deal, “is that private-equity firms are not evil. Even though campaigns may say that, administrations understand they’re necessary to get deals done.” If Carlyle hadn’t stepped in, he said, the refinery – and the 850 union jobs – wouldn’t have been saved.
Read The Wall Street Journal’s account of the deal here.
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