Hurricane Harvey’s Continued Affect On Gas Prices

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Tropical Storm Harvey landed in Texas as a Category 4 hurricane late Friday, and since then more than 4 million barrels of USA refining capacity has been taken offline, and substantial levels of onshore and offshore production has been cut as well. The average gallon of gas in the US fetched $2.368 on Monday, compared with $2.334 a week ago, according to AAA. “With this whole tip in the balance in which the U.S.is in a deficit of gas production, and the price of gas is soaring – that’s drawing the eye of gas refineries around the globe”. Still, Delaware gas price average, as of August 30, was up to $2.30 per gallon, up five cents overnight and nine cents on the week (since August 23).

A break in the same pipeline in September 2016 caused gasoline shortages and prices to spike about 20 cents a gallon in Alabama, Georgia, North Carolina, South Carolina, Tennessee and Virginia.

Shell spokeswoman Kimberly Windon, working from home in a Houston neighborhood damaged by tornadoes, said Sunday afternoon that the company had closed its offices and was shutting down the sprawling Deer Park refinery and chemical plant, which is along the Houston ship channel.

While Harvey’s refinery shutdown and Labor Day’s arrival could push gasoline to a two-year high of $2.50 per gallon, Casselano said they will come down.

“In terms of product price increases, it might get worse before it gets better”, Rob Smith, an energy analyst with IHS Markit, told The Associated Press. “Historically we’re going to see about 35 million people travel this holiday weekend”, said Beth Mosher, of AAA.

The immediate area of the Gulf States and the Northeast are expected to be hardest hit by the interruption in oil refining capacity, with OPIS saying that unbranded fuel prices will increase in most parts of the U.S.as well.

Experts forecast that the price will continue to rise another 5 cents, due to Texas shutting down several oil refineries because of massive flooding in the state.

Texas oil refinery shut by Harvey.

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. Perry executed an emergency agreement to access the reserves along with the Phillips 66 Lake Charles refinery. Colonial did not indicated how long it expects the closure to last. In addition, Louisiana Offshore Oil Port (LOOP) facilities are now reporting normal operations.

The department did not comment on whether it was asking the Paris-based International Energy Agency to plan a coordinated drawdown of crude from spare supplies.

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The release of 1 million barrels is the first tapping of the SPR, which now holds 679 million barrels of crude oil, for an emergency since hurricane Isaac in 2012.

Harvey Hurts Crude Oil Rebalancing, But Creates Opportunities

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