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Oil prices spike on shortage worries in Harvey's wake
[NEW YORK] US petrol prices have jumped in the aftermath of Hurricane Harvey and local shortages could occur but the situation is likely to stabilise in the coming days.
A gallon or 3.8 litres of petrol rose 13.5 per cent in New York on Thursday to close at US$2.1399, leaving it up nearly 30 per cent since Friday, the day Harvey made landfall in Texas.
The US Gulf Cost is home to about a third of American refining capacity, much of which is now off line due to the storm and flooding.
The Energy Department reported on Thursday morning that 10 refineries, representing 16.6 per cent of total US capacity, remained shut. Six more were attempting to re-open but this could take "several days or weeks," while two others were partially operational.
Together, the 18 refineries constitute 24.5 per cent of US capacity.
The largest refinery in the United States, the Port Arthur Refinery, operated by Motiva Enterprises in Port Arthur, Texas, has been idled.
"Given the unprecedented flooding in the city of Port Arthur, it remains uncertain how quickly the flood waters will recede, so we cannot provide a timeline for restart at this time," the company told AFP.
Damage inspection and repairs could take two weeks, according to media reports.
Two pipelines have had to reduce activities due to lack of fuel to transport: the Explorer pipeline, which reaches into the northern Midwest region; and the giant Colonial pipeline, which traces a path along the northeastern coast.
"There are definitely going to be some spot shortages developing as far east as South Carolina, with those big cities that usually get their supply from the Colonial pipeline, Atlanta, Knoxville, Nashville," said John Kilduff of Again Capital.
Colonial expects to resume activity in Houston beginning on Sunday.
WHAT ABOUT IRMA?
The problem is all the more acute because of the Labor Day holiday this weekend, the traditional end of summer when Americans often travel by car. And because another hurricane is heading to US shores.
To help alleviate the shortage of crude, Washington has decided to open its Strategic Petroleum Reserve, sending a million barrels of crude to the Phillips 66 refinery on Lake Charles in Louisiana to keep it operating.
Federal authorities have not ruled out releasing crude to other refiners.
Furthermore, gasoline inventories in the southeastern United States are currently "at or above the historic five-year range," according the Energy Department.
In addition, shipments of finished petroleum products also have been sent from Europe.
"But it will not hit our shores for 10 days and the volumes will not be able to replace lost supply," said Phil Flynn of the Price Futures Group.
"It really depends on how fast refineries are getting things up and running," he told AFP, adding that prices should ease as refinery re-starts or shipment arrivals are announced.
But everything could change, he warned, if Hurricane Irma, which is currently over the Atlantic, were to strike the US coast.