20% of US fuel output paralysed

HOUSTON: Flooding from tropical storm Harvey has shut nearly a fifth of US oil refining capacity, triggering worries about a gasoline supply crunch as the slowmoving tempest lumbers through the heart of America’s petrochemicals industry.

At least 3.6 million barrels per day of refining capacity are offline in Texas and Louisiana, or nearly 20% of total US capacity, based on company reports and Reuters estimates. Restarting plants even under the best conditions can take a week or more.

As a result of the outages, major pipelines carrying gasoline, diesel and jet fuel started to adjust deliveries or close lines outright because of a lack of supply. US gasoline futures surged 4% to settle at their highest in more than two years.

The US Gulf Coast is home to nearly half of America’s refining capacity, with some 5.6 million bpd of capacity in Texas and 3.3 million bpd in Louisiana.

More refinery closures were expected, as parts of Texas have received more than 1.2 metres of rain.

Colonial Pipeline, the key artery sending gasoline up the East Coast, was still shipping barrels there but had faced flooding at origination points in Texas.

“Harvey will raise product prices nationwide, denting demand, especially in September,” said Barclays analysts in a note on Tuesday.