Canadian companies hunker down US Gulf Coast operations to wait out Harvey

Canadian companies hunker down US Gulf Coast operations to wait out Harvey

Canadian companies hunker down US Gulf Coast operations to wait out Harvey

Hurricane Harvey is sending pump prices higher for US motorists and causing temporary shifts in the flow of oil and gasoline around the world after taking down a huge chunk of USA refining capacity. The average gallon of gas in the US fetched $2.368 on Monday, compared with $2.334 a week ago, according to AAA.

At a Fort Worth Costco, customers were greeted with pre-hurricane prices, just a fraction over $2.06 per gallon. It is now moving into Louisiana, where more floods are expected.

Thankfully, gas price spikes after hurricanes tend to be fleeting.

US gasoline futures were up 5 percent at $1.8732 a gallon, having earlier hit $1.9009, the highest since July 2015.

That's why the USA has about 230 million barrels of gasoline stockpiled, more than before the storms in 2005 and 2008. One reason is that there are ample stockpiles of gas, which helps compensate for the loss of Gulf Coast refineries.

US oil prices finished Wednesday with a loss (http://www.marketwatch.com/story/oil-pulls-back-further-as-harvey-continues-to-weigh-2017-08-30), at their lowest level in more than four weeks.

Harvey isn't the first big storm to hit the refinery-rich Gulf Coast, but the oil industry has undergone big changes since the last major interruption from Hurricane Ike in 2008.

Calgary-based producer Baytex Energy (TSX:BTE) announced it had suspended production (averaging about 37,000 barrels of oil equivalent per day) and exploration on its Texas Eagle Ford operations and closed its Houston office. "For all intents and purposes, there's little to no gasoline consumption in that market right now". Those supplies serve as cushions during emergencies like Harvey, which knocked out large swaths of oil and gasoline production.

Other sectors are also slowly emerging from Harvey's mess.

US refineries were running at near full rates in the weeks before the storm, chasing healthy margins as the critical summer driving season comes to a close and leaving very little spare capacity to help supply the hard-hit Texas region as it recovers from the storm.

"As of Monday afternoon, between 2.5 million bpd and 3.5 million bpd of refining capacity in the Gulf Coast region was offline due to a combination of refineries being shut down or running at reduced rates".

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