Drivers who plan to hit the road over Labor Day weekend will face higher gasoline prices because of the impact of Hurricane Harvey on the nation's refineries and pipelines.
After several days of heavy rain and flooding, gas prices reached an average of nearly $2.51 a gallon, up 20 cents since two weeks ago and nearly 30 cents since this time last year, although they fell back a bit Friday.
Refineries throughout the Gulf Coast shut down or reduced production a week ago in anticipation of the high winds and heavy flooding from Harvey.
"Hurricane Harvey has significantly impacted the entire Texas gulf coast with the petroleum refining centers of Corpus Christi, Houston, Port Arthur, Beaumont, and Lake Charles, La., either completely shutdown or [having] significantly scaled back operations," according to a statement released by the Port of Corpus Christi.
As of Thursday afternoon, 10 refineries representing 16.6 percent of daily U.S. refining capacity were shut down, according to the Department of Energy.
The nation's largest refinery, in Port Arthur, Texas, is expected to be closed for at least two weeks, Reuters reported.
All told about 4.4 million barrels of daily oil production have been suspended.
With less fuel being produced, several major pipelines supplying the Midwest and the East Coast have plans to shut down, or have already done so.
Colonial Pipeline said Thursday it was temporarily suspending lines that originate in Houston and feed the East Coast.
"Deliveries will be intermittent and dependent on terminal and refinery supply," it said.
With supplies growing tight, the Department of Energy announced it was taking 1,000,000 barrels of crude oil from the nation's Strategic Petroleum Reserve to send to a Phillips 66 refinery in Lake Charles on an emergency basis. The company will have to replace the crude later.
At a Friday news conference, Texas Gov. Greg Abbott sought to calm fears about fuel shortages. "There's plenty of gasoline in the state of Texas," he said. "Don't worry. We will not run out."
Bloomberg reported that European refiners are rushing to fill the gap opened by Harvey:
"At least 20 tankers were booked to load European fuels for the U.S. since Harvey made landfall, a rate nearly double the average for August, shipping data compiled by Bloomberg show. Shipbrokers said cargo flows to New York are expected to be the highest since November, when an explosion on Colonial Pipeline cut off supplies."
The gasoline supply issues could reduce inventories on the East Coast, causing prices to rise further, Zachary Rogers, a refining and oil products analyst at Wood Mackenzie Ltd., told Bloomberg.
Still, conditions are returning to normal around the Port of Corpus Christi, where flooding was minimal. The port's shipping channel has reopened and refineries in the area are expected to resume production within a few days.
Higher gasoline prices could affect consumer spending nationally, but the impact "should be small and temporary as production and refining come back on line," according to Ryan Sweet of Moody's Analytics.
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