How Hurricane Harvey May Impact US Crude Oil Production

03 September, 2017, 20:48 | Author: Valerie Burke
  • Harvey has taken 25 percent of oil and natural gas production offline

While all this plays out, drivers are noticing a spike in gasoline prices.

According to AAA, the average price in MI is $2.59 per gallon.

Both Ingham and Lipow predicted that gasoline prices will stabilize once the emergency passes because of the ample supply of crude.

"Retailers can either go out of business or pass their costs along", said Tom Kloza, director of global energy analysis at the Oil Price Information Service.

Other traders also said they were hurrying to take advantage of the closing window to import fuel into the U.S. Gulf as prices skyrocket.

We're just experiencing the ripple effect from Harvey's disruption of the USA gasoline market.

She said it's also possible western states could see more oil train traffic if companies choose to ship oil to West Coast refiners instead of to the Gulf.

"Harvey's disruptions mean greater variability in the weekly US oil inventory, production and demand data in the next weeks, which will likely add to higher volatility", Giovanni Staunovo, an analyst based in Zurich, told Bloomberg.

The Organization of the Petroleum Exporting Countries is frustrated that the storm has not pushed global prices higher, with one OPEC delegate telling Reuters, "It seems no event will move the oil price up much".

The U.S. Gulf Coast refining hub has in recent years become a major supplier of fuels such as gasoline and diesel to overseas markets such as Brazil, Mexico and Europe.

Harvey has taken 25 percent of oil and natural gas production offline

Harvey was forecast to come ashore in western Louisiana near the Texas border on Wednesday.

AAA, she added, "does not expect refineries to be offline for months, as early reports indicate minimal to no significant damage to (the) Corpus Christi and Houston refineries" in Texas shuttered by flooding from the storm. Half of Texas's refining capacity is equivalent to roughly 2.75 million barrels per day.

Over the last ten weeks, according to the API, crude oil inventories in the United States have shed more than 46 million barrels. Marathon Petroleum said its Galveston Bay plant is expected to restart by Thursday and its Texas City refinery was limping back to normalcy.

The No. 2 US refinery, ExxonMobil's Baytown, Texas facility, is also offline and has suffered some roof damage.

The effects of the shutdowns will reverberate well outside of Texas.

The EIA on Thursday revised lower its data on USA oil production for June, saying it fell almost 1 percent in the month to about 9.1 million bpd.

"Houston is home to refineries that represent about one-third of the country's refining capacity", she said Tuesday.

All of this means there is a lot less supply of gasoline, leading to higher gas prices.

Tropical Storm Harvey's impact on the energy industry spread worldwide as flooded USA refiners and closed fuel pipelines threatened to squeeze national supply, roiling global fuel markets and rerouting millions of barrels of fuel to the Americas to avert shortages. "The good news for consumers is that it seems some of the units are in the process of getting back in operation".

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