Gasoline spikes after Harvey shuts down Gulf Coast refineries
- Author: Zachary Reyes Sep 01, 2017,
Sep 01, 2017, 21:43
The crude is headed to Phillips 66′s refinery in Lake Charles, Louisiana, one of the few refineries in the Gulf Coast that has not been affected by the storm.
The National Hurricane Center (NHC) said in its latest update that flooding and heavy rain continued in eastern Texas and western Louisiana.
The nation's largest oil refinery is waterlogged and shut down after Harvey ravaged Port Arthur, Texas.
When it finally recognised the threat, OPEC led by Saudi Arabia embarked on a pump war with the United States aimed at hitting the high-cost US industry with lower oil prices.
"We have enough gasoline, that's not the issue", Sitton said.
Since Friday, they're up 10 cents, to a nationwide average of $2.45 a gallon - the highest they've been all year. Some of it is unfinished, meaning it needs to be blended before it can go to gas stations. That assumes they didn't suffer serious damage, which is still unknown. Marshall Watson, petroleum engineering professor at Texas Tech, said a lot of the gas sold in Lubbock comes from refineries in Big Spring and Borger, Texas, not the coast. However, they can't just flip a switch and immediately start producing gasoline and diesel.
Oil in NY declined nearly 6 percent last month as Harvey crimped crude processing and investors weigh rising American output against global supply cuts led by members of the Organization of Petroleum Exporting Countries.
Prices are likely to top $2.50 a gallon in coming weeks, which would be the highest since August 2015, the AAA said.
Gasoline futures for October delivery fell on Friday for the first time in five days, or since the Hurricane made landfall a week ago.
Federal authorities have not ruled out releasing crude to other refiners.
So at this time, the market remains bearish, but once a timeline is established for the refineries to come back on line, expect a more volatile trade. "It could be a week if not longer before Corpus Christi is at normal operations".
"The situation on the ground is even worse than what is being reported".
Refineries near Houston and in the Gulf Coast area are facing additional challenges.
Other sectors are also slowly emerging from Harvey's mess. That's almost twice as much as in September 2008 when Hurricanes Ike and Gustav hit the U.S. Gulf Coast, and in the summer of 2005 when Hurricanes Rita and Katrina struck.
Thursday, the Coast Guard began replacing damaged shipping lane markers and buoys.
Calgary-based pipeline company Enbridge (TSX:ENB), which bought Houston-headquartered Spectra Energy earlier this year, says it has closed its Houston offices and has removed all but essential staff from its natural gas gathering and processing facilities in the Gulf of Mexico.
"Things are changing nearly by the minute", said Charles Hobart, a spokesman for United Airlines.