Published: Sun, September 03, 2017
Economy | By Melissa Porter

Energy Sec. Perry Taps US Petroleum Reserves

Energy Sec. Perry Taps US Petroleum Reserves

Most North Texas gas stations are not expected to completely run out of gas, but costs are projected to rise from the shortages.

Benchmark U.S. gasoline prices were more than 26 percent higher on the week, and the premium of front-month contract to the second month hit a almost five-year high.

The Colonial Pipeline, the biggest United States fuel system, remained partially closed but said it kept operating its system east of the flood-hit areas in Texas.

That artery can carry 3 million barrels of gasoline and other products daily.

Some refineries along the Texas Gulf Coast are in the process of coming back online, Kloza said, particularly in the Corpus Christi area.

"This release sends a message to the market that the US government is willing to address any kind of supply shortages".

The Trump administration tapped into the emergency Strategic Petroleum Reserve Thursday in response to the major refinery outages on the U.S. Gulf Coast caused by Hurricane Harvey.

The crude is headed to Phillips 66′s refinery in Lake Charles, Louisiana, one of the few refineries in the Gulf Coast that has not been affected by the storm.

As of Thursday afternoon, 10 refineries representing 16.6 percent of daily US refining capacity were shut down, according to the Department of Energy.

Analysts predict drivers will see higher gasoline prices due to restrictions on supply.

David Holt, president of the Consumer Energy Alliance, said the holiday "is going to be a big challenge", particularly if "everyone rushes out to fill up" their tanks.

In a letter to Trump on Wednesday, Markey said US gasoline futures prices had surged by 8 percent since Harvey's landfall, rising to a level last reached in July 2015.

Motiva's massive Port Arthur refinery, the largest in the US, shut down on Wednesday due to "increasing local flood conditions".

Oil economist Karr Ingham said Harvey knocked at least 20 percent of the nation's refining capacity offline after it slammed the Texas Coast on Friday night and then flooded the refinery-rich areas of Houston, Beaumont and Port Arthur.

"The global implications of a stormy season in the U.S. Gulf of Mexico have mounted as the U.S. has emerged as a global energy hub", said Ed Morse, head of commodities research at Citigroup NY. But supplies from distant markets may not arrive soon enough to avert a crunch.

"Harvey is creating a dual benefit for Asian refiners", said Arun Kumar Sharma, finance director at Indian Oil. European refining margins hit a two-year high amid the surge in exports, which included a rare cargo of jet fuel.

Help is also on the way: Higher gasoline prices have enticed a jump in shipments from Europe.

"But it will not hit our shores for 10 days and the volumes will not be able to replace lost supply", said Phil Flynn of the Price Futures Group.

Suppliers in Chicago were trying to secure supplies after the Explorer Pipeline, which typically carries about 350,000 barrels a day (bpd) to the region, shut down. Colonial did not indicated how long it expects the closure to last.

Last year, disruptions that shut the pipeline for several days at a time caused fuel prices to spike, and gas stations as far away as Atlanta ran out of fuel.

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