Gas suppliers rush fixes as prices rise

Posted September 04, 2017

Challenges remain for the nation's system of getting gasoline to the pumps of service stations, since Hurricane Harvey forced the shutdown of at least eight Texas refineries.

Refiner Motiva has warned customers along the route of the largest US fuel pipeline to prepare for shortages after Hurricane Harvey shut refineries and cut supply to the line, said a source at a fuel distributor supplied by Motiva.

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. It can transport up to 2.5 million barrels a day of gasoline, diesel and jet fuel, and is directly connected to several airports, including Nashville, Charlotte and Dulles International Airport in Washington, D.C.

"Along with other fuel outlets in the area, RaceTrac is working to mitigate any supply issues and minimize the disruption caused by the effects of Hurricane Harvey", the statement said. Of the 26 refineries that connect to the Colonial system, 13 are located between Houston and Lake Charles, it said.

Gov. Roy Cooper on Thursday declared a state of emergency in order to allow gasoline to move into and through North Carolina amid delivery problems caused by Hurricane Harvey.

The closed refineries in the Gulf region have a combined refining capacity 24.3 percent of total Gulf Coast refining capacity and 12.7 percent of total U.S. refining capacity, the U.S. Department of Energy said Sunday.

On Wednesday Valero told its East Coast customers that it would stop supplying customers that don't carry its logo at all northeast terminals from Pennsylvania up to ME, according to a customer who asked not to be named because the information isn't public. The company shut it down as a precaution, in case Harvey damages its infrastructure in the southeast. The price spike is more dramatic in some states such as Georgia, where the average cost per gallon of regular gas has climbed from $2.22 a week ago to $2.39 now.

In North Carolina alone, gas prices jumped 5 cents since Saturday to $2.60, according to AAA.

One caller said it is $2.55 a gallon on Gordon Road. Exxon Mobil's Baytown refinery (capacity of 560,000 barrels a day) is also shut down. AAA said the average in New Jersey is up nine cents compared to Thursday and is up 18 cents compared to just last week.

Those braving the lines were finding prices in Cleburne ranging from $2.19 at H-E-B Grocery store to $2.36 at Valero on East Henderson Street.

The price surge reflects the market's anticipation that supplies will start to run low as long as the Colonial pipeline is shut down.

Outages from Hurricane Harvey and the subsequent price volatility provide a reminder that despite the enormous changes on the US supply side over the past decade, the country is still dealing with energy security vulnerabilities.

Almost half of the US refining capacity is in the Gulf Coast, a region with proximity to plentiful crude supplies including Texan oil fields and also Mexican and Venezuelan oil imports.