Gasoline Prices
Following onto James’ post on gasoline prices I thought it would drive the point home to list the refineries that are going to be impacted by this hurricane. So, after some quick work here is a list (not necessarily complete) of the oil refineries that are likely to be affected and shut down for at least some time in the next few days, and perhaps longer.
- BP Products North America, Inc., Texas City 437,000
- Valero Refining Co. Texas City, 209,950
- Valero Refining Co.,Houston 83,000
- Marathon Ashland Petroeum LLC, Texas City 72,000
- ExxonMobil Refining & Supply Co., Baytown 557,000
- ExxonMobil Refining & Supply Co., Beaumont 348,500
- Lyondell Citgo Refining Co. LTD, Houston 270,200
- Motiva Enterprises LLC, Port Arthur 285,000
- Premcor Refining Group Inc., Port Arthur 255,000
- Total Petrochemicals Inc., Port Arthur 233,500
- ConocoPhillips, Sweeny 229,000
- Crown Central Petroleum Corp., Pasadena 100,000
- Deer Park Refining LTD Ptnrshp., Deer Park 333,700
The total number of barrels per day that will be offline? 3,413,850 which is a slightly larger amount than was taken off line during Katrina. All of these refineries will shut down at the very least and many of them will likely suffer damage similar to those refineries in the New Orleans area. Hence gasoline prices will likely rise. By how much is a different issue. The Oil Drum has a similar list, but also includes refineries in Corpus Christi. I left the Corpus Christi refineries out as it looks unlikely that they will be substantially impacted based on the predictions of where Rita will make landfall.
Personally, I’m skeptical of the $4 and $5/gallon figure. One thing that will have a countervailing effect will be the very large drop in demand noted by Prof. Hamilton.
Also, some of the measures that were put in place after Katrina could be extended to blunt the impact of Rita. Such things as reducing regulations on the boutique gasoline blends.
Further, the gasoline markets don’t seem to be going bonkers which is something I’d expect if investors felt that this was going to cause a major supply disruption. Of course, perhaps all those investors are just being irrational and hoping that Rita will dissipate in the Gulf of Mexico. So prices will likely rise in the aftermath of Rita, but I’m doubtful (at least for now) that the prices will jump by oveer $2/gallon.
What does not make sense to me is the geographic “sympathy” in gas prices due to Katrina’s effect on refineries (vice oil production and oil prices) nationwide. In the Pacific Northwest, gas prices spiked by 1/3, though 90%+ of the oil consumed in the area comes from Alaska (the other 10% from Canada), and is locally refined.
I can understand the supply/demand in the Midwest, Plains, and South, where the refined products actually come from the impacted area.
It’s time to drill in Hyannisport, Berkely, Madison, Seattle, Boston, Connecticut, Portland (both), Burlington, etc. There is little to ruin in such immoral wastelands. Don’t drill near Washington D.C. however as it already is producing most of the world’s natural gas!
I don’t know how specialized the blends are in the Northwest, but if they aren’t one could easily imagine that gas distributors mind want to benefit from the higher prices in the east.
DL;
That was a good comment, Kudos to you for that one.
Steve, I do understand that Rita might cause some temporary disruption with supply But, that should not last for much more than a week. I can also understand that the prices of gasoline will rise due to a shortage, But, I still think that the oil companies will play any shortage to the hilt and jack up prices whether they are justified or not. To date, I think most every driving American strongly feel that they are getting ripped off by an artificial shortage of both gasoline and oil.
I also disagree with your so called “Investors” definition. These people are nothing more that Leach’s that should be labeled as “River Boat Gamblers” at best and a disease on our economy and the American people.