- The Washington Times - Wednesday, August 30, 2017

As Texas and Louisiana faced the final flurry of punches from Harvey on Wednesday, a second wave of pain is headed for the nation’s energy markets in what analysts say will be a disruption that reaches around the world.

Another day of heavy rainfall kept oil refineries and production rigs closed, including the nation’s largest refinery in Port Arthur, Texas, which was forced shut down Wednesday due to flooding. For Americans outside the disaster zone, the storm will hit home in the form of higher gas prices as Harvey wreaks havoc on the hub of U.S. energy production.

Early indications, including the price of gasoline futures, are that prices at the pump are headed for a major spike.

With much of the Gulf Coast’s oil infrastructure — responsible for the lion’s share of the nation’s oil refining capacity — still inoperable, energy market analysts say it’ll be weeks, perhaps even months, before things return to normal.

But even when production returns to regular levels, Harvey’s aftershocks will continue to rumble through the global energy industry.

“This is impacting the whole world,” said Nicole Leonard, a senior project consultant at Platts Analytics Oil and Gas Consulting. “There’s so much more in getting back to normal than I think anyone understands.”

Ms. Leonard said the slowdown of oil refining — the process of turning crude oil into fuel ready to be sold on the market — is hampering deliveries not just in the U.S. but around the world, with markets in Asia and elsewhere not getting the usual amount of fuel from American suppliers.

At least 15 refineries in the Gulf Coast are fully shut down, and another five are operating at reduced rates, according to the Energy Department.

The latest victim is Motiva’s massive refining facility in Port Arthur, the largest in the country. The owners were forced shut it down Wednesday as massive flooding crippled the area. The Port Arthur site refines about 600,000 barrels of oil per day.

“Our whole city is underwater right now,” Port Arthur Mayor Derrick Freeman said in a Facebook post.

The refineries that have closed down, including Port Arthur, account for more than 20 percent of total U.S. refining capability, federal data show.

More than 18 percent of oil production and 19 percent of natural gas production in the Gulf have been shut down due to the storm, officials said, in addition to the dramatic slowdown in refining capabilities.

In addition, about two dozen oil tankers carrying more than 15 million barrels of crude oil near Texas ports remain unable to offload their supplies because of the ports are closed down.

Officials at Valero, another company that’s been forced to temporarily shut down multiple refineries, said it’s unclear exactly when they can begin regular operations.

“We continue to work closely with local, regional and national government entities at all of our plants to address storm conditions. The safety of our workers, their families and surrounding communities is our primary focus as we continue to monitor the weather and determine our next steps,” the company said in a statement.

While gas prices haven’t jumped much since the storm made landfall — the average cost at the pump has risen by about 3 percent since Friday — it looks as if a major price surge is around the corner.

Gasoline futures, which are reflective of wholesale prices and often are a warning sign that pump prices will soon rise, jumped 6 percent Wednesday. They’ve risen by about 13 percent since Friday.

“Right now, for your summer driving prices, you’re looking at a couple months of elevated gas prices at the pump,” Ms. Leonard said.

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