Energy prices to spike in Harvey’s wake

Oil and gas prices are expected to spike over the next week or more as about 10 refineries representing more than 15 percent of the nation’s refining capacity are shut down in the wake of Hurricane Harvey. (Aug. 28) AP

Flood waters closed oil refineries Wednesday along the Texas Gulf Coast, including the nation’s largest, as Hurricane Harvey showed its power to ravage the energy infrastructure and drive up gasoline prices.

Some 15 refineries were going off line from Corpus Cristi, Texas, to Port Arthur, Texas, the Energy Department reported. The list included the largest refinery in the U.S., the Saudi-owned Motiva plant in Port Arthur, which began what it called “a controlled shutdown.”

Taken together, the closures represent about 25% of U.S. refining capacity, GasBuddy.com petroleum analyst Patrick DeHaan said.

“It’s a chilling effect on the refining industry, which is in a dire state right now,” DeHaan said.

Just ahead of the Labor Day holiday weekend, one of the top travel weekends of the year, DeHaan estimated Wednesday that gas prices would increase 15 cents to 25 cents per gallon nationwide as a result of Harvey. Earlier, he had predicted a boost of 5 to 15 cents.

More: Gas prices to rise even faster as Harvey drenches refiners

More: Tropical Storm Harvey makes 2nd landfall just west of Cameron, La.

Refinery outages include facilities run by Exxon Mobil, Citgo, Petrobras, Flint Hills, Magellan, Buckeye, Shell, Phillips 66 and Valero Energy, according to the U.S. Chamber of Commerce’s Global Energy Institute.

Consequently, Americans are using about 9.7 million barrels per day of gasoline, while refineries are pumping out fewer than 8 million, DeHaan said.

“Gasoline inventories are going to be chiseled away quickly if that continues,” DeHaan said.

U.S. Sen. Edward J. Markey, D-Mass., exhorted President Trump to release supplies from the nation’s Strategic Petroleum Reserve to ease the impact on consumers.

But with nearly 230 million barrels of gasoline inventory on hand as of Friday, according to the U.S. Energy Information Administration, “we’re not running out of gas anytime soon by any means,” AAA’s Jeanette Casselano said.

Still, the refinery outages and the closure of several key ports have disrupted the supply of fresh fuel to Texas Gulf Coast stations and other regions. The Motiva operation alone generates about 635,000 barrels per day in normal times, according to the Oil Price Information Service.

“Return to service is contingent upon recession of floodwaters in the area,” Motiva spokesperson Angela Goodwin said in a statement. “Our priority remains the safety of our employees and the community.”

https://www.usatoday.com/story/money/cars/2017/08/30/largest-u-s-refinery-shuts-down-harvey-floods-texas/615524001/