DALLAS — Tropical Storm Harvey is sending pump prices higher for motorists and causing temporary shifts in the flow of oil and gasoline around the world after taking down a huge chunk of U.S. refining capacity.
Retail gas prices in the U.S. climbed 2 cents a gallon on Wednesday and have rise 7 cents in the past week, to a national average price of $2.42 per gallon, according to Gasbuddy.
“In terms of product price increases, it might get worse before it gets better,” said Rob Smith, an energy analyst with IHS Markit.
It will be days or even weeks before the energy sector in the southeast Texas Gulf Coast is back to normal operations. The region accounts for about 3 percent of the U.S. economy and is a crucial export market for oil and chemicals.
Wednesday brought news that the nation’s biggest refinery, in Port Arthur, Texas, had begun a complete shutdown, the latest domino to fall among Gulf Coast refineries.
The facility lies along the border with Louisiana, a hub for refineries that collectively account for more than 12 percent of the nation’s refining capacity, according to IHS Markit.
More than one-fifth of U.S. refining capacity has been shuttered since Harvey made landfall on August 25, according to S&P Global Platts.
Mathew Peterson, chief wealth strategist for LPL Financial, noted that refiners’ inability to produce and distribute gas is weighing on supplies, driving up prices at the pump.
It could take two weeks or longer before big refineries in the Houston area can recover from a record-setting deluge and resume normal operations. That assumes they didn’t suffer serious damage, which is still unknown.
“Only when the water is gone will refineries be able to estimate how much damage they have — presently, it’s very difficult,” said Ehsan Ul-Haq, director for crude oil and refined products, Resource Economist Ltd. “If the damage is not too much, then probably it’s a matter of weeks; if they’re impacted significantly, it might take three months” for the refineries to get back up to full speed.
Gasoline futures headed higher for a third straight day. They had climbed 10 cents to $1.88 a gallon Wednesday.
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.
The so-called shale revolution has led to a surge in oil production in the U.S., increasing the nation’s exports of crude oil and gasoline to Mexico and other…