Heavy rains and flooding from Tropical Storm Harvey threatened more oil refineries along the Louisiana coast after hammering plants in Texas, forcing Exxon Mobil Corp and Citgo Petroleum [PDVSAC.UL] to consider shutdowns.
Nearly 3 million barrels of oil a day can’t be refined into gasoline and other products – about 16% of USA refining capacity, according to Goldman Sachs.
“Refineries outside the affected area may delay maintenance to benefit from high processing margins”, said Commerzbank oil analyst Carsten Fritsch, adding, “Hence, the negative impact on crude oil demand and oil product supply might be less severe than feared”.
Furthermore, gasoline inventories in the southeastern United States are now “at or above the historic five-year range”, according the Energy Department. It now is at 679 million barrels. “That should drive up the wholesale and retail prices really across the country”. Some analysts predicted the price hikes would be temporary, but cautioned it is not yet clear how much damage has been done to some of the world’s largest refineries. It runs underground and is now under water in many parts of Texas, where inspections are needed before it can be fully operational again, Colonial spokesman Steve Baker said Thursday.
CNN Money also reports that, “In the aftermath of previous storms – such as Hurricanes Katrina, Rita, Ike and Isaac – gasoline prices peaked within two weeks after landfall at a level of 20 cents to 80 cents per gallon higher, according to PIRA Energy, an analytics unit of S&P Global Platts”. It has not commented since Harvey on whether it would release fuel specifically from the gasoline reserve.
After Hurricane Rita in 2005, processions of cars trailed tankers in Houston as they made deliveries to gas stations.
Motor fuel prices rose as much as 6.8 percent, while NY oil futures slipped 0.9 percent.
The refueling process is slow, however, leaving some trucks waiting more than four hours to refuel, he said.
“Given the unprecedented flooding in the city of Port Arthur, it remains uncertain how quickly the flood waters will recede, so we can not provide a timeline for restart at this time”, the company told AFP.
Pipeline delivery is being throttled back due to the storm. “The U.S. oil production landscape has moved more onshore essentially, away from the Gulf of Mexico”. Motiva said Monday that operations at the plant were “stable”.
Other pipelines that haul fuel from the Gulf Coast including the 700,000 bpd Kinder Morgan Plantation pipeline and Enterprise Products Partners’ TE Products system were functional.
“Immediately tapping the SPR, including using the SPR authority to release gasoline from the Northeast Gasoline Supply Reserve, could help protect consumers by putting downward pressure on markets and combating any market speculation that may be occurring”, Markey said in the letter to Trump. “The big unknown is how long the refining centers on the Gulf Coast are going to be impacted”.
The U.S. Environmental Protection Agency has expanded its emergency fuel waivers to Louisiana and Georgia allowing more regions to sell higher volatility gasoline through September 15.