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Released on September 28, 2005 A Significant Blow, But Not a Knockout As the chart above indicates, while refinery shutdowns are much less than they were just prior to Hurricane Rita’s landfall, when all Gulf Coast refineries from Sweeney, TX to Lake Charles, LA were shut down for precautionary reasons and to allow employees to evacuate, they still are significantly greater than at the peak following Hurricane Katrina. As a result, EIA estimates that these refinery outages amount to about 1.3 million barrels per day of lost gasoline production, over 700,000 barrels per day of lost distillate fuel production, and nearly 400,000 barrels per day of lost jet fuel production. While some of the lost production from inoperable refineries can be made up from increased production from unaffected refineries and increased product imports, the rest of it will likely be made up from additional draws from inventories and lower demand due to higher prices. While Hurricane Rita undoubtedly delivered a significant blow to the U.S. refining industry, it did not deliver the knockout punch that some had feared. Rita made landfall north and east of the Houston/Texas city/Galveston refining center, home to more than 2 million barrels per day (or over 12 percent) of U.S. refinery capacity. If all of these refineries were also affected for an extended period, then over a quarter of the country’s refinery system would be offline, which would have likely sent petroleum product prices to new all-time highs. As it is, prices are expected to increase over the next few weeks, particularly gasoline prices. For now, the critical factor is how much of the refining capacity that is still shut down can return to service over the next few weeks. With the data for the week ending September 23 showing gasoline, distillate fuel, and crude oil inventories all at or above the average range for this time of year, it appears that inventories, along with increased product imports, may be sufficient to make up for lost production due to refinery outages for a brief period. However, the longer these refineries remain shut down, the more serious the situation becomes, particularly with the heart of the winter season just a few months away. For the latest information on how oil infrastructure is being impacted in the aftermath of Hurricane Katrina, see EIA’s Daily Report and more detailed reports from the Office of Electricity Delivery & Energy Reliability. U.S. Average Retail Gasoline Price Up Almost 2 Cents Retail diesel fuel prices rose 6.6 cents to reach 279.8 cents per gallon. Prices were up throughout most of the country, although the West Coast did see a price decline of 0.7 cent to 297.8 cents per gallon, the highest regional price in the country. California prices averaged 303.1 cents per gallon after dropping 2.9 cents. The largest price increase occurred in the Midwest, where prices increased 9.1 cents to 273.9 cents per gallon. Propane Inventories Higher Despite Storm Text from the previous editions of “This Week In Petroleum” is now accessible through a link at the top right-hand corner of this page. |
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