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)
SINGAPORE, April 24 (Reuters) – Demand for liquefied natural gas (LNG) to power ships will rise this year on attractive prices, while more dual-fuel vessels join the global fleet, industry executives said....
ROME (Reuters) – An Italian judge on Friday cleared three migrant sea rescue charities that had been accused of abetting irregular immigration in complicity with human traffickers, throwing out a case opened...
(Bloomberg) — The closure of one of the East Coast’s busiest ports after the collapse of Baltimore’s Francis Scott Key Bridge has so far not led to broad price increases,...
April 19, 2024
Total Views: 2191
Why Join the gCaptain Club?
Access exclusive insights, engage in vibrant discussions, and gain perspectives from our CEO.
This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.