Harvey Update: Supply, Demand and Gasoline Markets

September 5, 2017

Before then-Hurricane Harvey first made landfall, we discussed how mega-weather events historically have impacted the regional/national oil supply chain and supply levels in the marketplace. The uncertain path of Hurricane Irma will drive continued conversation about storm effects on refineries and other energy infrastructure and the potential for market impacts around the country.

The U.S. Energy Department reports that as of Monday afternoon, eight refineries were shut down, representing a combined capacity of more than 2.1 million barrels per day or about 11 percent of total U.S. capacity. Eight refineries had begun the process of restarting after being shut down, which could take a number of days or weeks to complete. 

Meanwhile, operators of the Colonial Pipeline, the 5,500-mile pipeline that runs from Houston to Linden, N.J., reported Monday night that its distillate Line 2 had been restarted between Houston and Lake Charles, La., and that its gasoline Line 1 was on schedule to be restarted between those points on Tuesday. The lines had been down or working on a limited basis following Harvey.

(see image of Colonial Pipeline)

The effects of restricted gasoline and diesel production due to refinery impacts, and the resulting limited flow of these products through the pipeline were being felt. The Houston Chronicle reported that fuel supplies were constrained in Houston, Dallas and San Antonio. Nationally, AAA said the average price a gallon of gasoline was $2.648, up from $2.378 a week ago. AAA’s Jeannette Casselano:

“Consumers will see a short-term spike in the coming weeks … but quickly dropping by mid to late September.”

Texas Oil and Gas Association (TXOGA) President Todd Staples urged Texans to return to pre-hurricane buying patterns for the fuel they need. Staples said the Gulf Coast fuel marketplace is being helped by the restoration of refining operations. Fuel from other states and countries is being brought in, he said. Staples:

“Every single Texan can help themselves and their neighbors during this period of recovery by not overbuying fuel. … The flood has impacted all infrastructure sectors from water and electricity to schools, hospitals and fuel. It is important to maintain normal routines and normal buying patterns for fuel to the best of your ability, and to conserve when you can. When we overreact, we put a strain on all of our resources. … All of us can help – not further hinder – recovery by meeting our basic fuel needs until fuel supply chains can replenish.”

As we’ve mentioned in previous posts, the nation’s energy infrastructure system is large and geographically diverse. The Texas-Louisiana area is an important part of that system, yet current inventories of crude oil and refined products nationwide....

See entire article, with corresponding graphics, at EnergyTomorrow.org.


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