Harvey has halted a quarter of oil production from the Gulf of Mexico as well as at least a third of gasoline output in both the Houston and Corpus Christi areas. The outages in America’s energy hub will significantly curtail the supply of gasoline.
Gasoline futures – the wholesale prices charged to gas stations – in the USA were up 5 percent early Monday, the highest since July 2015, after surging to as much as 7 percent, CNN Money reported. While significant, that represents a much calmer reaction than the initial 7% spike on Sunday night. Consumers will likely end up paying higher prices at the pump as a result.
The flooding has interrupted about 16% of USA refining capacity, which translates to about 785,000 gallons of gas lost each day, Goldman Sachs analysts wrote in a research report. This will result in an increase in gas prices. At $2.37, todays national gas price average is four cents more expensive on the week and one of the largest one-week national gas prices surge seen this summer, the AAA says. Diesel futures rose 3.56 cents, or 2.19%, to $1.6479 a gallon.
Kloza said that normally refining is knocked offline for just a brief time, making the impact on prices just fleeting.
GasBuddy senior petroleum analyst Dan McTeague says it now seems unlikely that Canadian gasoline prices will jump by 12 cents per litre as they did in 2008 after Ike was the last hurricane to roar ashore in Texas.
More good news: Gasoline markets aren’t freaking out. Throughout the Gulf Coast, key refineries and production facilities have been forced to close. Other major storms took place before the USA oil boom, when inventory was much lower.
Valero Energy reported Sunday that there were no “substantial refinery impacts” because of the storm.
Harvey was the first hurricane to hit USA refineries since the country’s emergence as a growing producer and exporter of oil, so the impact is expected to be felt further afield than with previous tropical storms. “For all intents and purposes, there’s little to no gasoline consumption in that market right now”. Through the first six months this year, the port has exported an average 217,000 barrels per day (bpd), according to cargo tracking service Kpler.
Ahead of the market’s open on August 25, oil futures “are up amid the production shutdowns from Hurricane Harvey“, Adkins said. “How long will it take ships to get in and out of Houston Ship Channel?” “It is too soon to gauge the full extent of Harvey’s damage to the region’s energy infrastructure”.
It also depends on where Harvey goes next.
“The “hangover” from the storm could be longer than people think”, said Sandy Fielden, director of commodities and energy research at Morningstar in Austin, Texas.
On November 30, 2016, the OPEC summit was held in Vienna, where OPEC members reached an agreement on reducing oil production by 1.2 million barrels per day.