Gas stations running low as Harvey squeezes fuel supplies

Violet Tucker
September 3, 2017

Oil economist Karr Ingham said Harvey knocked at least 20 percent of the nation's refining capacity offline after it slammed the Texas Coast on Friday night and then flooded the refinery-rich areas of Houston, Beaumont and Port Arthur.

Oil prices were unable to gain any significant support from the larger than expected EIA inventory draw, especially as there was a slight build in gasoline inventories for the week.

At least two East Coast refineries have run out of gasoline for immediate delivery as they scrambled to fill barges for markets normally supplied by the Gulf Coast, two refinery sources said. In North Dakota, LaDoucer says a gallon of gasoline has jumped 10 to 15 cents since Tuesday.

The Houston area is a major hub for the energy industry.

This widened the crack spread, the difference between the prices of USA gasoline and crude oil.

Senator Edward Markey, a Democrat, urged the department this week to also release gasoline from the country's emergency gasoline reserve, which holds a total of 1 million barrels of oil in three locations in the Northeast: New York Harbor, Boston and Maine. "To start, in California, you have the toughest gas to make in the country".

USA crude futures fell in early Asian trading on Friday, partly reversing sharp gains from the previous session, amid ongoing turmoil in the oil industry with a quarter of US refining capacity offline.

Damage from Hurricane Harvey has continued to unsettle crude oil prices, although prices have attempted a limited recovery.

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The operator of the Colonial Pipeline has said operations from Texas will resume as soon as refining safely does, but probably no earlier than Sunday. United States petrol futures were particularly rattled by Wednesday night's announcement by Colonial Pipeline that it was shutting down the key artery carrying fuel from the Gulf coast refining hub to the East Coast, in a move that could drastically restrict petrol and diesel flows to some of the biggest cities in the US. However, by the end of the week, with two refineries restarting, the crack spread, or the difference between crude oil and gasoline prices, fell almost 11 percent as gasoline prices retreated from two-year highs and demand for crude trickled higher.

The tech companies, such as Gas Buddy, have released statements to the public explaining why the nation's gas stations are raising their prices.

Nationwide, prices averaged $2.45 per gallon for regular gasoline, up 23 cents from the same time a year ago, and $2.56 for diesel, up 20 cents, according to the AAA Gas Price Tracker.

The national average could climb to $2.50 as a result of Harvey.

The gasoline supply issues could reduce inventories on the East Coast, causing prices to rise further, Zachary Rogers, a refining and oil products analyst at Wood Mackenzie Ltd., told Bloomberg.

"The spike should be short-lived", Flynn said.

This would mean restricting heavy grade supplies to refiners in Asia and Europe, but boosting the supply of lighter grades priced against Brent in order to narrow the premium to WTI.

Other reports by Guamnewswatch

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