Upturn of fuel price in America

The United States of America has been hit by gasoline shortages as the effect of tropical storm Harvey and the flood it brought to Texas and environs disrupted production on the Gulf Coast.

Retail US gasoline prices rose 2.8 per cent from Friday to Saturday as refineries warned customers about the fuel-supply shortage.

They were at $2.59 a gallon, according to motorists’ advocacy group, AAA, representing a 16.7 per cent rise in the average price from a year ago. Prices have risen more than 17.5 cents since August 23, before the storm began.

Average prices in Texas, the epicenter of the storm, rose more than 3 per cent from Friday to Saturday, and are up 12 per cent from a week ago.

Refiner, Motiva, warned customers along the route of the largest US fuel pipeline to prepare for shortages after Harvey shut refineries and cut supply to the line, said a source at a fuel distributor supplied by Motiva.

Harvey shut refineries that can process up to 4.4 million barrels per day (bpd) of crude. The plants shut down include Motiva’s 603,000bpd facility in Port Arthur, Texas, the largest refinery in the country.

Nearly half of the US refining capacity is in the Gulf Coast, a region with proximity to plentiful crude supplies including Texan oil fields and also Mexican and Venezuelan oil imports.

“The refineries were built on the Gulf Coast with the idea that we’re going to import,” said Sandy Fielden, Director of Oil and Products Research at Morningstar in Austin, Texas. That’s why we’re having problems today because that’s where they were all built.”

The reduction in fuel supplies has forced the Colonial Pipeline, which supplies fuel from refineries near the Gulf of Mexico to the US Northeast, to reduce supplies.

Convenience store and gas station chain, Circle K, a big buyer from Motiva, said the company was working with a limited supply.

Some crude oil pipelines have restarted operations. Magellan Midstream Partners announced late Friday that it resumed operations on its BridgeTex and Longhorn crude oil pipelines. The two pipelines transport around 675,000bpd of West Texas crude oil into East Houston

The company says it expects to resume service on its Houston crude oil distribution system over the weekend.

US crude production continues to stall following the storm. As of Friday, volume of crude production still shut-in had declined to about 153,000bpd, down from 324,000bpd just two days ago.