BANGKOK, Thailand (AP)
Pump prices headed higher as Tropical Storm Isaac forced several major refineries along the Gulf Coast to halt production in preparation for high winds and heavy rains.
Fear of reduced gasolene supplies sent wholesale prices up US7.7 cents, or 2.4 per cent to US$3.155 per gallon Monday. The average retail price for a gallon of gasolene in the United States (US) rose to US$3.75 on Monday, and it could pass US$3.80 by Labour Day weekend, says Tom Kloza, chief oil analyst at the Oil Price Information Service.
Oil fell Monday because Gulf Coast refineries won’t be using as much in the next few days and damage to key oil and gas operations in the Gulf of Mexico seemed less likely as the storm’s winds aren’t expected to be as strong as some had feared.
Refineries should also escape damage. But refinery owners often shut down operations in advance of a storm. These facilities consume enormous amounts of electric power and generate steam to cook crude oil into gasolene, diesel, jet fuel and heating oil. If a refinery loses power suddenly, operators can’t properly clear the partially cooked oil out of pipes, and restarting the refinery can take several days or even weeks.
If refineries instead conduct what is known as an orderly shutdown, they can restart as soon as the power supply is assured again. The Gulf refineries will likely stay off line for about three days.
SEVERAL REFINERIES CLOSED
About one million barrels per day of refining capacity is expected to be shut down, roughly half of the refining capacity in the potential path of the storm. The US consumes about 19 million barrels of oil products per day.
Marathon Petroleum Corp said it is shutting down its Garyville, Louisiana, refinery. The refinery has the capacity to refine 490,000 barrels of oil per day, making it the third largest refinery in the US. Phillips 66 is closing its 247,000 barrel per day refinery in Belle Chasse, Louisiana. Chevron Corp is keeping its 330,000-barrel per day Pascagoula, Mississippi, plant running as of Monday afternoon.
The National Hurricane Centre now predicts Isaac will grow to a
NEW YORK – Oil prices dropped Friday amid renewed talk about the release of strategic reserves and as traders kept an eye on a tropical storm that could disrupt offshore operations in the Gulf of Mexico. New York‘s main contract, light sweet crude for October, shed 12 cents from Thursday to close at US$96.15 a barrel. In London, Brent North Sea crude for delivery in October dived US$1.42 to settle at US$113.59 a barrel. Rich Ilczyszyn, an analyst at iiTrader, said that New York market sentiment was tense throughout the session and in the last half-hour traders shuffled their portfolios before the weekend. Weighing on the market was a report by the Petroleum Economist that Western consumer countries could release strategic oil stocks as soon as early September in response to soaring oil prices, citing “several sources.” “The loss of supplies from sanctions-hit Iran will be used to justify the move, which could unleash as much or more oil as last year’s 60 million barrel stock releases,” the London-based industry journal said on its website. One of the sources said the International Energy Agency asked the United States not to proceed alone with a release, but to wait for IEA-wide participation to avoid undermining IEA credibility. Gulf of Mexico operators were bracing as Tropical Storm Isaac headed toward Haiti and was on track to threaten oil and gas offshore operations. BP said it was evacuating its Thunder Horse platform, the world’s largest offshore production and drilling facility. “With forecasts indicating the storm could develop into a hurricane and enter the eastern side of the Gulf in coming days, we are taking additional steps to respond,” the British oil giant said. Shell said it was preparing for evacuations of non-essential personnel from platforms and had suspended some drilling operations but that no production had been impacted. Read more: President Barack Obama is calling anew on Congress to end tax subsidies for the oil and gas industry, saying America needs to develop alternative sources of energy in the face of rising gasoline prices. Obama said Saturday in his weekly radio and Internet address that he expected Congress to consider in the next few weeks halting $4 billion in tax subsidies, something he hasn’t been able to get through Congress throughout his presidency. He said the vote would put lawmakers on record on whether they “stand up for oil companies” or “stand up for the American people.” “They can either place their bets on a fossil