Energy Prospectus

Storm springs back to life in the Gulf, now threatens one-third of U.S. refining capacity

Watching what could be the first hurricane to make landfall in Texas since 2008 and dump up to two feet of rain on the heart of the U.S. refining industry.

Read more: https://www.cnbc.com/2017/08/23/tropica ... acity.html

Energy prices are on their way up as a major hurricane is set to hit the U.S. within hours. Hurricane Harvey, at the time of this writing, is forecast to become a high Category 3 hurricane, the strongest hurricane to hit the U.S. since at least 2008, and perhaps since 2005. The storm is heading directly for the coast of Texas between Houston and Corpus Christi, where many oil refineries are located. “It is becoming pretty clear this morning that Harvey will be mentioned alongside Katrina and Sandy in the history books,” Todd Crawford, chief meteorologist at The Weather Company, told Bloomberg.

Hurricane Harvey forces shut downs. The Gulf Coast is home to 45 percent of the U.S.’ refining capacity, and nearly 20 percent of the nation’s oil production. Corpus Christi is also a major port for oil and refined products coming in and out of the country. Gasoline prices spiked more than 4 percent to their highest levels in weeks as roughly 1 million barrels of refining capacity was shut down over the past 24 hours. But crude oil prices did not receive the same attention – only a few offshore platforms were affected, and the expected outage of refineries actually means demand for crude will dip as downstream operations pause.

Up to 35 inches of rain are expected, bringing life threatening winds, floods and storm surge. Royal Dutch Shell (NYSE: RDS.A), ExxonMobil (NYSE: XOM) and Anadarko Petroleum (NYSE: APC) evacuated their employees from the area. As of now, government data suggests that 10 percent of the Gulf’s oil production – about 167,000 bpd – along with 14 percent of its natural gas production will be curtailed.