Harvey shuts down America's largest gasoline pipeline, but don't panic just yet

by Ben Pena September 4, 2017, 6:56
Harvey shuts down America's largest gasoline pipeline, but don't panic just yet

USA gasoline prices (NYSEARCA:UGA) continued to surge today, with the RBOB September contract settling at $2.1399/gal, up $0.2552/gal and more than $0.50 higher than on August 22, before Texas coastal refineries began shutting down ahead of Harvey. He explained refineries in Texas are simply underwater and shut down a portion of the pipeline until the water recedes.

The Colonial Pipeline Company says they are hoping to reopen a key line that supplies gas to the South either Monday or Tuesday.

Benchmark U.S. gasoline prices have risen more than 15 percent since the storm began, but in trading Friday the contract for October delivery lost 1 percent, the first decline in five days.

In addition to refinery shut downs, several major pipelines continue to operate at reduced rates, have shut down or plan to shut down due to lack of supply.

According to The Wall Street Journal, flooding in Texas has led to fuel shortages across the state from Austin to Dallas and disrupted the flow of petroleum from the Colonial Pipeline that moves gasoline, diesel and jet fuel to the East Coast. It should be noted, however, that many market watchers view the supply disruptions as temporary. The Pipeline originates in Houston and supplies the East Coast. Colonial said on Thursday it expects to resume full service Sunday.

One Chevron station in downtown Dallas that sold regular gas for $2.29 a gallon just before the storm was charging $2.99 on Thursday.

A big blow to the USA fuel supply - A major pipeline that carries tens of millions of gallons of fuel between Houston and North Jersey has shut down because of Harvey.

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On Sunday, average retail prices rose again, to $2.621 a gallon, with weekly increases hitting 18 percent in Georgia and 19 percent in SC, according to motorists advocacy group AAA. "I passed one gas station that's $2.44 in Cary, so this one (on South Saunders Street) is the cheapest I've seen", said Ken Bond as he was filling up at $2.31.

Colonial continues to ship as much gasoline and other refined products as available from Louisiana-based refineries and other refineries on the Colonial system east of Lake Charles, and will continue to do so as markets return to normal.

GasBuddy estimates an overall Harvey impact of 20 to 30 cents per gallon to the national average, up from an earlier projection of 15 to 25 cents.

"Some of those refineries in Philadelphia are looking to send barges of gasoline down towards the Southeast and Mid-Atlantic", said DeHaan.

United States has been hit by petrol or gasoline shortage as the effect of Tropical Storm Harvey and the flood it brought to Texas and environ disrupted production on the Gulf Coast. The average a week ago was $2.17. Among the reasons: About one-quarter of the Gulf Coast's oil refining capacity was taken offline, according to the Oil Price Information Service.

The Department of Energy has released 500,000 barrels of oil from the nation's reserve of crude oil.

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