Gas prices expected to rise as hurricane closes key oil, gas operations in Texas
Associated Press
DALLAS — Key oil and gas facilities along the Texas Gulf Coast have temporarily shut down as Hurricane Harvey pounds the region with torrential rain and high winds, virtually assuring gasoline prices will rise in the storm’s aftermath.
Even before Harvey made landfall late Friday, dozens of oil and gas platforms had been evacuated, at least three refineries had closed and at least two petrochemical plants had suspended operations.
How soon they reopen depends on the severity of flooding and the resumption of power to the areas. Experts say it’s still too early to say, with the storm still moving through the region Saturday evening. But they believe gas prices will increase 5 cents to 25 cents per gallon.
Harvey also continued to take a toll on U.S. air travel Saturday, with more than 1,000 flight cancellations as of the early evening, according to FlightAware. Nearly 850 of the canceled flights were scheduled to either depart from or land at Houston’s two airports.
The shipping industry also is expected to be disrupted by the worst hurricane to hit the refinery-rich Texas coast in more than 50 years.
Nearly one-third of the nation’s refining capacity sits in low-lying areas along the coast from Corpus Christi, Texas, to Lake Charles, La.
Several refineries that were at greatest risk of a direct strike from high winds already have shut down, but it is the potential for flooding in the Houston and Beaumont areas that could really pinch gasoline supplies. Flooding and power outages caused by a storm surge are considered the biggest risk.
“The biggest driver of how much this will increase gas prices is how much rain falls in Houston during the next three days,” Andy Lipow, president of consultant Lipow Oil Associates, said Saturday. “We are in a wait-and-watch mode.”
For now, Mr. Lipow is predicting gasoline prices will rise 10 cents per gallon east of the Rockies.
Tom Kloza, an analyst for the Oil Price Information Service, predicts that prices could rise by up to 25 cents a gallon, but that an increase of 5 cents to 15 cents is more likely, assuming that the storm doesn’t cause lasting damage to refineries.
Flint Hills Resources announced that it would shutter a refinery before Harvey hit and Valero Energy Corp. said it was closing two facilities in Corpus Christi.
In addition to the refinery closures, Formosa Plastics shut its petrochemical plant in Point Comfort, Texas, and OxyChem suspended operations at its petrochemical plant in Ingleside, Texas, according to Platts, an S&P Global division that tracks the commodities and energy industry.
Oil and gas companies evacuated workers from oil platforms in the Gulf of Mexico. The U.S. Bureau of Safety and Environmental Enforcement estimated that platforms accounting for about 22 percent of oil production and 23 percent of natural gas output in the Gulf had been shut down.
Shipping terminals along the Texas coast shut down as the storm approached. Port operations in Corpus Christi and Galveston closed, and the port of Houston said container terminals and general cargo facilities closed around midday Friday.