Petroleum Industry Feels Effects of Hurricane Harvey
Production stumbles as massive storm hits Texasby Jonathan Lopez, on
Hurricane Harvey is the most powerful storm to hit Texas in over half a century, wreaking havoc across the state and causing at least two fatalities. High winds and widespread flooding have devastated the Gulf Coast, and the U.S. petroleum industry is feeling the impact as a result. Many refineries have ceased production, while several ports involved in the export of oil have closed. Reuters reports that between Texas and Louisiana, refining capacity is capped at roughly 8.9 million bpd, with Texas contributing 5.6 million bpd and Louisiana contributing 3.3 million bpd. With the arrival of Hurricane Harvey, an estimated 2 million bpd has been knocked out.
As a result, crude oil futures took a dive on Monday, while gas prices soared.
Asian and European sources will likely see a bump in terms of exports, but experts say global refining margins are expected to stay strong. Meanwhile, fuel shortages are being reported in Latin America as exports from Texas drop off. Meanwhile, the International Energy Agency has announced that it would respond to any major oil supply disruptions. As of this writing, it’s unclear how quickly production will return to normal levels, but as flooding spreads east towards Louisiana, it’s likely we’ll see some sort of long term impact on production.
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Hurricane Harvey is shaping up to be one of the biggest catastrophes of 2017, and we’re still a long ways from coming to grips with the total damage wrought by the storm. The long term effects on the petroleum industry is also a pretty big question mark – will gas prices see a more permanent bump until production in Texas gets back on its feet? How will the decline in U.S. exports to Latin America be felt? We’ll be watching the story as it develops.
If you would like to donate money to help disaster relief efforts for those affected by Hurricane Harvey, there are several organizations available, including the American Red Cross, Samaritan’s Purse, The Salvation Army, and Heart to Heart International.