Britain To Build A ‘National Flagship’ To Promote Maritime Trade
by Alistair Smout (Reuters) – Britain is to build a new flagship to promote its business and trade interests around the world, the government said on Saturday, in a move it...
By Erwin Seba HOUSTON, Aug 30 (Reuters) – Tropical Storm Harvey inflicted more damage on the heart of the U.S. energy industry on Wednesday, churning into Louisiana after flooding the biggest U.S. refinery in Texas, causing fuel shortages and high gasoline prices that could dog the country for weeks.
Refinery damage from Harvey has already driven gasoline futures prices up 18 percent over the past week and prices at the pump are rising too, particularly in the U.S. South. And more refineries could close now that Harvey has made landfall in Louisiana, where refiners can produce 3.3 million barrels per day.
The Gulf accounts for nearly half of total U.S. refining capacity. As the United States is the world’s largest net exporter of refined petroleum products, effects of the disaster are starting to ripple through global flows.
Traders in Europe and Asia were working to reroute cargoes to the United States and Latin America to fill the gap left by refining and shipping closures in the Gulf.
Major U.S. pipelines carrying gasoline and diesel fuel to Midwest and East Coast markets have been either throttled back or shut due to reduced supply. This has hit wholesalers. The premium for Chicago-area gasoline above benchmark futures is at the highest since June 2016, while the Gulf Coast price is at its widest above futures since August 2012.
New York Harbor prices spiked as well, as the Colonial Pipeline Co, the key artery serving the East Coast, said lack of supply will continue to slow its entire system.
The U.S. Environmental Protection Agency said it has expanded fuel waivers for gasoline throughout the U.S. Southeast.
About 4.4 million barrels of U.S. refining capacity have been shut by Harvey, based on company reports and Reuters estimates. That is about 24 percent of U.S. refining capacity and almost equal to the national daily consumption of Japan.
That includes the biggest U.S. refinery, Motiva’s Port Arthur facility, which can handle more than 600,000 barrels a day. Portions of the refinery were flooded after more than a foot of rain dropped overnight.
Other Port Arthur refineries also shut overnight, including Total’s plant, where sources familiar with operations said they expected water to recede by the weekend.
“The refineries shut down as a precaution might be able to restart, the others in a worst-case scenario could take weeks and months to repair,” said Antoine Halff, director of Global Oil Markets at the Center on Global Energy Policy at Columbia University.
More rain fell on the area in the last 24 hours than any other part of the region since the storm began last week, according to David Roth, meteorologist at the U.S. Weather Prediction Center.
The coast took a step forward and a step back on Wednesday. Refiners further south on the Texas coast, including Marathon’s Galveston Bay, were beginning restarts, while Citgo’s 425,000 bpd Lake Charles refinery, on the Louisiana coast, in the path of the storm, cut capacity in half.
Restarts after a storm are especially dangerous for refiners, though the Corpus Christi area received much less rain than the Houston metro area.
“The continued increase in flooding creates high uncertainty on the amount of damage that U.S. refineries will incur, the pace at which the shutdown will reverse and the magnitude of capacity that will be impaired over the next few months,” Goldman Sachs analysts wrote in a note.
They added that they would expect about 10 percent of what is currently offline would stay shut for several months.
Just last week, refiners pushed output to their highest percentage of capacity since 2005 as gasoline demand hit an all-time weekly record of 9.85 million barrels, according to U.S. Energy Department data on Wednesday.
Gasoline futures gained 7 percent on Wednesday alone. Refinery shutdowns and fuel shortage worries have also boosted retail fuel prices, particularly in the U.S. South and Southwest.
Overnight, the AAA said retail gasoline prices were up 6 cents from a week ago at $2.404 per gallon of regular gasoline nationwide. Some states, like Georgia, have seen prices rise as much as 12 cents a gallon.
In addition, shale production has been sharply curtailed in the Eagle Ford region of Texas due to the storm.
(Reporting by Erwin Seba; additional reporting by Catherine Ngai, Devika Krishna Kumar, Julia Simon and Jarrett Renshaw, writing by David Gaffen; editing by David Gregorio)
(c) Copyright Thomson Reuters 2017.
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