Hurricane Harvey is taking oil and gas infrastructure offline in Texas and the Gulf of Mexico, raising prospects for a spike in gasoline prices.
Nearly 19 percent of Gulf of Mexico oil production, and than 18 percent of its natural gas production, are offline as of Monday afternoon, federal officials said.
At least 10 refineries in the region have also shuttered. According to S&P Global Platts figures on Sunday night, about 2.2 million barrels per day of refining capacity have closed in Texas, including major plants operated by Exxon Mobil Corp., Valero, Shell and other oil giants.
Exxon said Monday afternoon that its Baytown, Texas, facility, the second-largest U.S. refinery with a 560,500 barrel per day capacity, “has completed the safe shutdown of the majority of its operations.” The company’s Beaumont refinery was operating at “reduced rates,” Exxon said.
At least five refineries were offline in Corpus Christi, Texas, as of Sunday night. Valero, which operates a 293,000 barrel per day refinery in Corpus Christi and a smaller site in Three Rivers, Texas, said officials “are working closely with our business partners and port operations to determine the availability of necessary transportation and logistics infrastructure to resume refinery operations.”
The western Gulf of Mexico is home to about one-third of the United States’ refining capacity, meaning the shutdowns because of Harvey are likely to drive up gasoline prices for the rest of the country.
Gasoline wholesale futures were up as much as 3.3 percent in midday trading on Monday.
Goldman Sachs analysts, using past hurricanes as a guide, estimated Monday that Harvey will reduce gasoline supplies by 615,000 to 785,000 barrels per day.
Officials estimated last week that major disruptions in the region could drive up gasoline prices by up to 15 cents per gallon, and industry predictions were in line with that mark on Monday. The storm hasn’t damaged a refinery, a prospect that experts said could lead to a 25 cent-per-gallon spike by next weekend.
Harvey, now a tropical storm, has dumped at least 35 inches of rain on parts of Houston. Rainfall could reach 50 inches in parts of the region before the storm moves out later this week.