United States refiner Motiva warns of fuel supply crunch after Harvey

Sunday, 03 Sep, 2017

It is estimated more than 37,000 homes have been damaged as a result of the heavy winds and rain.

Outages that could last for weeks led to a sharp rise in gasoline and diesel futures prices in the United States and Europe, opening several arbitrage opportunities.

They were at $2.59 a gallon, according to motorists advocacy group AAA. The line's closure is expected to put a crimp on energy production and ultimately increase gas prices.

The pipeline supplies almost 40% of gasoline in the South, with a capacity of 57.5 million gallons of gasoline per day.

But, government officials said Saturday that deliveries from Lake Charles, Louisiana east to Greensboro, North Carolina are only intermittent. Motiva said restarting the refinery would depend on floodwaters receding.

The national average of $2.45 a gallon is the highest in two years.

Drivers in Dallas waited in line Thursday to fill up their tanks, anxious that refinery and pipeline shutdowns along the Gulf Coast would cause a gas shortage. The national average is on pace to top $2.50 per gallon, coinciding with the busy Labor Day travel period. The premium for Chicago-area gasoline above benchmark futures is at its highest since June 2016, while the Gulf Coast price is at its widest above futures since August 2012.

"I'm taking action to make it easier to get gasoline into our state so North Carolinians who need gas can get it", Cooper said.

Gas prices have marched higher throughout the week, reaching levels not seen in two years.

In Abilene, gas prices range from $2.13 to $2.49 per gallon.

Washington, D.C. metro gas average at $2.40 today, up five cents from yesterday and up 10 cents in the last week. In South Carolina, gas is up 23 cents.

As Tropical Storm Harvey hit southeast Louisiana on Wednesday, it brought torrential rains that shut the biggest USA refinery, owned by Motiva Enterprises in Port Arthur, Texas, and one nearby held by Total SA.

Harvey raked across the Texas Gulf coast, roiling global fuel markets as it knocked out about 4.4 million barrels of daily refining capacity, slightly more than Japan uses.

The U.S. Energy Secretary approved an additional release of crude oil from the Strategic Petroleum Reserve, adding 3.5 million barrels to the 1 million barrels approved as of Thursday.

A Colonial Pipeline spokesperson says gas if flowing from Louisiana intermittently. More information will be released Thursday afternoon.

Freight rates continued to climb on Thursday.

According to the WSJ, the Colonial Pipeline is the biggest fuel pipeline in the United States, stretching 5,500 miles through 12 states.

At least two East Coast refineries have run out of gasoline for immediate delivery as they scrambled to fill barges for markets normally supplied by the Gulf Coast, two refinery sources said. "These are preventative measures". And while only half the Dallas-Forth Worth area stores will have gasoline, all will remain open, he said.

The price surge reflects the market's anticipation that supplies will start to run low as long as the Colonial pipeline is shut down.

The Colonial Pipeline is a major main artery in the nation's fuel infrastructure.