Gasoline futures are soaring on Monday even while crude oil prices have declined.
Tropical storm Harvey has pushed oil and gasoline prices in the opposite direction because refinery closures are expected to dampen demand. Ten refineries in Texas are reportedly shutdown, taking out about 15 percent of U.S. refining capacity. The U.S. Gulf Coast is home to about half of the nation’s refining capacity.
Exxon Mobil on Saturday shuttered its Baytown refinery, the nation’s second-largest, when flood waters overwhelmed the area. Its Beaumont refinery is operating at reduced capacity.
No one knows how long the Texas refineries will remained closed. Depending on the extent of the flood damage, some refineries could be closed for weeks or perhaps months.
Gasoline prices are expected to rise as the lack of refinery capacity squeezes supply. Fortunately, the peak summer driving season in the U.S. is coming to a close, so demand for gasoline should fall as well. The national average price per gallon was $2.37 up 3.7 cents from a week earlier.
Some Gulf Oil rigs have also been shut down. The Bureau of Safety and Environmental Enforcement said Sunday that nearly 379,000 barrels a day worth of crude oil production has been halted. That amounts to around 21.6 percent of Gulf Oil production capacity.
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