I don't have time this morning to do it all justice.. but here are the crib notes..
Like Katrina.. Hurricane Harvey has had a major impact on Energy production.. but there are differences.
1) We do not know the extent of the damage.. but it does not appear to be with Crude Oil production as damage to production platforms is not reported at this time. However, Flooding is a MAJOR problem shutting down almost 20% of the regions refineries along the gulf coast.
Robert Rapier posted this..
US gasoline prices continued to rise Thursday as downed refineries tightened supplies in the US Gulf Coast and the Atlantic Coast, according to a Thursday evening ET report by S&P Global Platts, the leading independent provider of information and benchmark prices for the commodities and energy markets.
NYMEX September RBOB settled at $2.1399/gal Thursday, up 25.52 cents/gal, and up more than 50 cents from August 22, before Texas coastal refineries began shutting down ahead of Harvey.
Colonial Pipeline, which is able to ship 1.37 million b/d of gasoline on its Line 1 from Houston to Linden, New Jersey, said deliveries will be "intermittent and dependent on refinery supply."
Roughly 3.04 million b/d of refining capacity remains down in Texas, or 16% of US capacity. Assuming refiners cutting runs or in the process of returning are at 50% of capacity, the total downed capacity rises to 4 million b/d, which is 22% of the US total.
Motiva is preparing to start up its 603,000 b/d Port Arthur, Texas, refinery -- the nation's largest -- once flooding from Harvey subsides, but was unable to provide a firm timeline for when that would be.
With so much Texas refinery capacity offline, it is important to keep Louisiana refiners running to feed local demand and the Colonial Pipeline. The US Strategic Petroleum Reserve will release a total 1 million barrels of crude to Phillips 66 for its Lake Charles, Louisiana, refinery. The plant is running normally, and likely sought an SPR release to help bolster crude supplies constrained by weather-related port closures."
Gasoline stocks in the Southeastern U.S. entered the summer at their highest level relative to demand for that time of year since the mid-1990s
Well the charts don't copy but we've got about 2 weeks of supply.. although there are spot shortages starting to show up.
Source: Energy Information AdministrationNote: Gasoline stocks divided by average monthly demand implied by the EIA's "prime supplier" sales data for the "Lower Atlantic" states
Here is the same chart for distillate fuel, roughly three-quarters of which is consumed as diesel for cars and trucks in the region:
Diesel is similar.. about a 2 week cushion.. until the tanks run dry
Source: Energy Information Administration
Note: Distillate stocks divided by average monthly demand implied by the EIA's "prime supplier" sales data for the "Lower Atlantic" states.
So while prices for fuel will rise across the region for days to come, diesel looks like more of a pricing hot-spot than gasoline for now. Much will depend on how quickly Colonial comes back; Bloomberg News reported on Thursday morning that supply from Houston may start up again by late Sunday.
So we've suffered a shock.. but if things can calm down we should soo see this pass..
.. did someone say another hurricane was forming?
However again quoting Rapier..
"If more refineries are coming up tomorrow, and you can stretch your gas for two more weeks, I would sit out the feeding frenzy at the pumps at this point. This situation should improve over the next two weeks. I will provide an update tomorrow if I hear news. If Motiva can get its huge refinery up soon, it will be a very positive sign."