US fuel prices surged on Monday as two more Gulf Coast refiners cut output and a third considered reductions, leaving more than 13 per cent of the country’s refining capacity offline after Tropical Storm Harvey flooded plants and shut seaports.
The storm swung back over the Gulf of Mexico on Monday and was expected to bring another 10 to 15 inches (25 to 38 cm) of rain to the Houston area and up to 8 inches as far east as New Orleans, the National Weather Service said.
Marathon Petroleum’s Galveston Bay refinery in Texas City, Texas, cut production by half, sources familiar with plant operations said.
Lyondell Basell Industries’ Houston refinery early on Monday also cut output by half to conserve crude supply, other sources said.
Meanwhile the nation’s largest plant, Motiva Enterprises’ 603,000-barrel-per-day (bpd) Port Arthur, Texas, refinery was considering shutting due to high water on the plant grounds and running with essential personnel only, two sources said.
The profit that refiners make per barrel of gasoline jumped as high as 21 per cent in the first trading day following Harvey’s landfall near Corpus Christi, Texas, late on Friday, as fears of short supplies gripped the market.
Gasoline for immediate delivery in the Gulf Coast hit five-year highs, traders said, while US gasoline jumped as much as 7 per cent to $1.78 per gallon, the highest since late July 2015.
In total, 2.45 million barrels per day (bpd) of US refining capacity was shut due to Harvey, which knocked out four refineries in South Texas before bringing flooding rains to plants near Houston.
Nearly 19 per cent of oil production in the Gulf of Mexico has been shut, the US Department of the Interior said on Monday.
The latest refining cutbacks were at Marathon’s 459,000 bpd plant and Lyondell’s 264,000 bpd Houston plant.
Marathon spokeswoman Stefanie Griffiths declined to comment. Lyondell and Motiva did not reply to requests for comment.
Oil prices fell as the refinery closings reduced demand, with US crude futures dropping by more than 3 per cent on Monday.
Business picture of the day Business picture of the day
Among other Gulf Coast refiners, Exxon Mobil’s 362,300 bpd Beaumont, Texas, refinery has cut production, the company said. It did not provide additional details. Earlier, Exxon halted production at its 560,500 bpd Baytown, Texas, plant.
Valero Energy’s 335,000 bpd Port Arthur, Texas, refinery is running at or near maximum capacity but contending with flooding in the plant, sources said on Monday. Valero confirmed the plant is running, but has not commented on further.
Total’s 225,500 bpd Port Arthur, Texas, refinery is operating normally, sources said. In the area where the storm first hit, Citgo Petroleum’s refinery in Corpus Christi is preparing to begin its restart process as early as on Wednesday, sources said. A spokesperson did not reply to requests for comment.
Two other refiners who shut plants in the region, Valero and Flint Hills Resources, did not respond to requests for updates on their operations there.