Gasoline Shortages - Update 9/5

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U.S. Gulf Coast refineries have started to come back online, easing fears of a major fuel shortage, although bottlenecks and localized scarcities will persist for some time. The Gulf Coast is still drying out while another major hurricane looms towards the end of the week.

Refinery outages continue, but are easing. A handful of refineries have come back online as the flood waters have receded, allowing operations to resume. ExxonMobil (NYSE: XOM) is bringing its Baytown facility back online, the second largest in the nation. Valero Energy (NYSE: VLO) said its Corpus Christi refinery (293,000 bpd) and its Texas City refinery (225,000 bpd) have returned to full production, while its Port Arthur refinery (293,000 bpd) was in the “final stages” of returning to operation. However, the Motiva complex (600,000 bpd) remains offline. Still, enough refineries have come back online to allow the restart of the Colonial Pipeline system, a crucial conduit to supplying the East Coast. Gasoline prices fell back from their peaks last week.

Gasoline spike eases, but supply disruptions could linger. The return of a large chunk of the Gulf’s refining capacity has smoothed out the price spike in the gasoline futures market. But that does not mean that the disruptions will be over soon, or that the gasoline market will see minimal effects. Some refineries could be offline for weeks, perhaps months. “We have seen a fair amount of refinery capacity return online but there still is a significant amount that is still offline between the Houston-Beaumont-Port Arthur region,” Andy Lipow, president of Lipow Oil Associates LLC in Houston, told Bloomberg. “The market is pricing in a rather quick recovery in the Houston area but it might still be several weeks for the Houston area refiners to return to full production.”
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Keep your gas tanks full. Do not assume that all gasoline stations will be able to get fuels.