Gulf Coast Refinery Outages Will Lead to Gas Price Spikes

The area along the Gulf Coast of Texas and Louisiana hold the largest concentration of oil refineries in the country, and many of them will have to stop operating as Hurricane Harvey approaches, leading to possible spikes in gas prices, News Radio 1200 WOAI reports.

Oil industry analyst Tom Kloza tells News Radio 1200 WOAI the refineries will probably be at a standstill by tonight.

"We are looking at refineries having to shut down on a precautionary level," Kloza said.  "A refiner can't take the chance of having a power outage potentially hit them while they are operating.  So if they are in a probability cone, they have to shut down 24 hours before potential landfall."

And since the National Hurricane Center has issued storm surge warnings all along the Texas coast and into Louisiana, Kloza says that will mean refineries as far away as Lake Charles will be affected.

He says despite strong supplies of gasoline, this is a bad time for a refiner halt, because demand remains strong as we approach the Labor Day holiday.

"Right now we have high demand, we are still in the driving season, we need refineries to continue to operate at very high rates of utilization, and we have something that threatens that in the past few days."

Most refineries in the Corpus Christi area have already begun shutting down operations and evacuating workers.

Kloza didn't say how much of a price spike he expects, but it could be substantial, and it also will probably be brief.

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