HomeBusinessFull U.S. Tanks May Ease Risk of Fuel Shortages From Harvey

Full U.S. Tanks May Ease Risk of Fuel Shortages From Harvey

As devastating as the flooding has been for oil refiners in the U.S. Gulf Coast, surplus fuel inventories may help the industry withstand the worst storm to hit the country in more than a decade.

Deluges from Tropical Storm Harvey have turned Houston’s busiest highways into canals of standing water and displaced thousands of people and livestock. The floods also forced shutdowns across a regional energy hub that supplies fuel to millions of Americans from Oklahoma to Florida to New York. As much as 30 percent of U.S. fuel production may come off line temporarily, according to energy investment consultant Tudor, Pickering, Holt & Co.

But even as fuel prices surged and more heavy rain was forecast, gasoline stockpiles in the Gulf Coast are the highest for this time of year in two decades, just as demand is likely to drop, according to Bloomberg Intelligence. The Colonial Pipeline, which supplies about a quarter of the fuel consumed in the East Coast, said service has been interrupted at several locations near its origin point in Houston. Hebert and all other facilities east of Houston are operational, the company said in a statement on its website.

Full U.S. Tanks May Ease Risk of Fuel Shortages From Harvey

“I think everyone right now is playing it very conservatively,” said Andy Milton, a senior vice president of supply for Mansfield Oil, a Gainesville, Georgia-based fuel retailer. “I don’t see Colonial stopping. There’s still a lot of product to pump.”

U.S. gasoline inventories are just below the highest seasonally in at least 20 years, with enough for 24 days. In the Gulf Coast region, stockpiles reached 81.8 million barrels as of Aug. 18, 4.9 percent higher than a year earlier and 7 percent above the 20-year seasonal high, government data show.

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Regional Shutdowns

Facilities in Corpus Christi, Texas, run by Valero Energy Corp. and Citgo Petroleum Corp., began shutting Thursday, and are now readying to restart this week. Houston-area plants began to shut late Friday, and more outages are popping up as the storm moves east toward Louisiana. The country’s largest refinery, Saudi-owned Motiva Enterprises’ plant in Port Arthur, Texas, may shut on Tuesday.

To be sure, the closings of ports and refineries, as well as the inability of people to get to work because of all the flooding, could still limit supply from the region, which is home to the largest and most vital refineries in the country. Tudor, Pickering estimates the disruptions could last one or two weeks.

“Every Houston-area refinery will likely shut or at least significantly curb operating rates by tomorrow due to the catastrophic flooding, lack of personnel and crude delivery delays,” Tudor analysts said in an emailed research note Monday.

See more: As Hurricane Harvey Floods Texas, Refineries Count Mounting Cost

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