Another bad news following the catastrophic flooding brought to Texas by Hurricane Harvey, besides the humanitarian crisis, dozens of casualties and more than 90 billion dollars in damage is the fact that the biggest oil refinery in the US was shot down on Wednesday due to flooding. Hence, oil and gas prices will probably spike all across the United States starting from next week most probably, as approximately 15 oil refineries which make for more than twenty five percent of America’s refining capacity went offline completely or partially in the wake of Hurricane Harvey.
The huge flooding forced a number of refineries along the Gulf Coast in Texas to close on Wednesday, including America’s largest one. Hurricane Harvey did significant damage to the infrastructure and drove up prices for basically everything in the area, including gasoline prices.
Approximately fifteen oil refineries went offline, from Port Arthur, Texas to Corpus Christi according to a report from the Energy Department. Among those closed due to flooding we must notice the Motiva plant in Port Arthur, a Saudi owned facility that makes for America’s biggest oil refinery, which started what has been described as a controlled shutdown. Among the 15, some are owned/run by Citgo, Exxon Mobil, Petrobras, Shell, Valero Energy, Buckeye and Phillips 66. Americans are currently churning 9.7 million barrels per day, whilst the remaining refineries are pumping only 8 million (or less) barrels per day.
All these closures taken together make for approximately 25% of total US refining capacity according to petroleum industry analysts. Obviously, with these shutdowns, a chilling effect on the refining industry is to be expected soon and due to the dire state of the infrastructure and with Labor Day holiday just around the corner, we should expect for gas prices to spike nationwide. Patrick DeHaan, who is a petroleum analyst for GasBuddy.com predicted a 15 to 25 cents gas price boost per gallon nationwide. The nationwide-average price per gallon on Wednesday was $2,40, 6 cents up from a week ago ($2,34).
However, it must be noted that the US sits on 230 million barrels of gasoline inventory, hence we’re not going to run out of gas anytime soon.
PHOTO: F. CARTER SMITH/BLOOMBERG NEWS