Gasoline Prices Up After Harvey Wrecks Texas Refineries

Marco Green
September 1, 2017

S&P Global Platts estimates that Harvey has affected about 2.2 million barrels per day of refining capacity in the United States, including ExxonMobil, Shell and Phillips 66 operations that began shutting down Sunday.

McMonigle predicted the Energy Department will take more steps because refinery recoveries are likely to be slow. That represents almost a quarter of US refining production, and restarting plants under even the best conditions can take a week or more.

Industry standard Brent crude was down 48 cents to $51.52 while West Texas crude prices were down 30 cents to $46.14.

Hurricane Harvey, which brought record flooding to the US oil heartland of Texas and killed at least 35 people, has paralysed at least 4.4 million barrels per day (bpd) of refining capacity, according to company reports and Reuters estimates.

The price took some by surprise, like Arasely Campos, who said it was not right to hike up gas prices at the same time thousands of people are trying to flee the flooding from the hurricane.

Crude prices were mixed in Asian trade Monday as the closure of refineries in USA oil heartland Texas due to monster storm Harvey was offset by sluggish global demand. Colonial Co, which moves more than 3 million barrels of fuel per day from the Gulf Coast to the East Coast, says many lines will be shutdown with no projected restart time. That would depress demand for crude even further-Port Arthur is where the largest USA refinery is located.

US farm incomes will rise in 2017, halting three consecutive years of decline, as a slump in crop and animal prices eases.

"Because of the shortage, you will likely see a price increase in the East Coast, which would incentivize the other refiners to shift gasoline yields", Rogers said.

In early afternoon trade in Asia, Brent crude for October was trading at $52.57 a barrel, up 16 cents or 0.31 percent.

On Thursday, the U.S. Energy Department said it would release 500,000 barrels of crude oil from the Strategic Petroleum Reserve to supply the refineries that are still running in an effort to stem fuel shortages. Retail gasoline prices have started to rise, with the average price for a gallon of gasoline rising 1 cent overnight to $2.38 nationally, while the average price in Texas rose 2 cents overnight to $2.19 per gallon.

After hurricanes such as Katrina, Rita, Ike and Isaac, gasoline prices peaked within two weeks of landfall, at 20 to 80 cents per gallon higher, according to PIRA Energy.

US crude inventories fell by 5.78 million barrels last week, the API industry group reported on Tuesday, suggesting a gradual tightening of the USA oil market.

The figures, however, do not reflect the impact from Harvey.

Though flood waters have yet to recede, energy analysts said they anticipated potential long-term effects from the historic storm.

Other reports by Click Lancashire

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