Flooding chokes off 25% of oil refining

Major rigs forced to shut down, pushing gas prices higher

Floodwaters closed oil refineries Wednesday along the Texas Gulf Coast, including the nation’s largest, as Hurricane Harvey showed its power to ravage the energy infrastructure and drive up gasoline prices.

Fifteen refineries were going off line from Corpus Cristi to Port Arthur, Texas, the Energy Department reported. The list included the largest refinery in the USA, the Saudi-owned Motiva plant in Port Arthur, which began what it called “a controlled shutdown.”

Taken together, the closures represent about 25% of U.S. refining capacity, GasBuddy.com petroleum analyst Patrick DeHaan said. “It’s a chilling effect on the refining industry, which is in a dire state right now,” DeHaan said.

Just before the Labor Day holiday weekend, one of the top travel weekends of the year, DeHaan estimated Wednesday that gas prices would increase 15 to 25 cents per gallon nationwide as a result of Harvey. Ear-

lier, he had predicted a boost of 5 to 15 cents.

The nationwide average as of Wednesday morning was $2.40 a gallon, up from $2.34 a week ago, according to AAA.

Refinery outages include facilities run by Exxon Mobil, Citgo, Petrobras, Flint Hills, Magellan, Buckeye, Shell, Phillips 66 and Valero Energy, according to the U.S. Chamber of Commerce’s Global Energy Institute.

Consequently, Americans are using about 9.7 million barrels per day of gasoline, while refineries are pumping out fewer than 8 million, DeHaan said.

“Gasoline inventories are going to be chiseled away quickly if that continues,” DeHaan said.

Sen. Ed Markey, D-Mass., urged President Trump to release supplies from the nation’s Strategic Petroleum Reserve to ease the impact on consumers.

But the nation had nearly 230 million barrels of gasoline inventory on hand as of Friday, according to the U.S. Energy Information Administration, so “we’re not running out of gas anytime soon by any means,” AAA’s Jeanette Casselano said.

Still, the refinery outages and the closure of several ports have disrupted the supply of fresh fuel to stations in the Texas Gulf Coast and other regions.

The Motiva operation alone generates about 635,000 barrels per day in normal times, according to the Oil Price Information Service.

“Return to service is contingent upon recession of floodwaters in the area,” Motiva spokesperson Angela Goodwin said in a statement. “Our priority remains the safety of our employees and the community.”

The plant was running at 60% capacity as of Tuesday afternoon and 40% on Tuesday evening.