- The Washington Times - Monday, August 28, 2017

The effects of Hurricane Harvey are being felt across the energy sector, with oil refineries along the Gulf Coast off-line and fuel output dropping dramatically, fueling fears that gas prices could soon spike as a result.

Energy market analysts say the storm, which wreaked havoc and dumped historic amounts of rain over the weekend, is likely to leave a lasting mark.

“The slow moving nature of the storm will likely lead to these shutdowns continuing in coming days and may generate persistent damage as well,” said Damien Courvalin, head of energy research at Goldman Sachs.

The federal government says Harvey has had a major impact on oil refineries in the region. As of Monday afternoon, at least 98 offshore drilling platforms — more than 13 percent of all platforms in the Gulf of Mexico — have been evacuated due to the storm.

Nearly 19 percent of all oil production in the Gulf, or 331,000 barrels per day, has been temporarily stopped.

More than 18 percent of natural gas production also has been shut in due to the storm, according to data from the Bureau of Safety and Environmental Enforcement.

In addition to the production decline, it’s estimated that as much as 3 million barrels’ worth of oil refining capacity is off-line.

Major energy firms such as Shell, Exxon Mobil, Valero Energy and others have closed refineries in the region. At least 10 refineries have suspended operations.

Valero has shut down its refineries in Corpus Christi and Three Rivers, and officials say they’re assessing how quickly the facilities could be back up and running. In the meantime, the company has turned much of its attention to assisting its employees.

“Corpus Christi and Three Rivers employees impacted by the storm continue to receive assistance including food and lodging, and other personal needs. Valero teams are also assisting employees to address damage to their homes in the Coastal Bend area,” the company said Monday. “We are monitoring the welfare of our employees in Houston and surrounding areas and stand ready to help those affected by the flooding as soon as it is safe to do so.”

BP has closed its headquarters due to rain in Houston, though it says its production platforms in the Gulf remain open.

“The safety of our people remains our highest priority,” BP said in a statement.

The region is the central hub of all U.S. oil refining and natural gas processing. About 45 percent of American petroleum refining capacity is along the Gulf Coast, as is more than 50 percent of natural gas processing, according to figures from the Energy Information Administration.

The 10 refineries that have shut down represent about 15 percent of the nation’s total refining capability. Texas’ Gulf Coast is home to to nearly 5 million barrels per day of refining abilities, while the Louisiana coast has facilities that refine nearly 4 million barrels per day, figures from S&P Global Platts show.

The tangible effects could be felt Monday, as oil prices hit a one-month low over fears that a glut of crude oil could be the result of refinery shutdowns. Prices could drop further over the next 48 hours, as another 850,000 barrels per day of refining capacity remain under threat, Mr. Courvalin said.

It’s unclear exactly what effect the refining slowdown will have on gasoline, though local reports from the Houston region say that prices have jumped. The national average was $2.37 per gallon Monday, according to gasbuddy.com, up about 5 cents from a week ago.

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