Hurricane Harvey: Flood-Induced Oil Refineries Shutdown Could Spike Gas Prices

AUSTIN, TX — Ten oil refineries in Houston and Corpus Christi are shutting down amid continuing torrential rains along the Texas Gulf Coast spawned by Tropical Storm Harvey — plant closures that could hike gas prices by as much as 25 cents a gallon during the production halt, according to a published report.

S&P Global Platts first reported the news on Sunday, noting the plants collectively refine about 2 million barrels of oil per day. The refining plants are being forced offline over flooding concerns.

The Texas Gulf Coast is a major refinery hub accounting for nearly one-third of the nation's capacity in turning oil into gas, diesel and other fuels. Analysts told CNN Money the mass shutdown is likely to spark a short-term increase in gas prices between five and 10 cents, with the potential for a 25 cent increase per gallon in a worst-case scenario of prolonged refining inactivity.

How Might Hurricane Harvey Impact The Oil Industry And Environment?

One refinery plant going offline is the Baytown facility located some 25 miles east of Houston. That plant alone can process up to 584,000 barrels of crude oil per day, employing about 7,000 people, CNN Money noted in its report.

S&P Global Platts estimates roughly 2.2 million barrels per day of refining capacity will now not materialize given the stall in production. The Interior Department's Bureau of Safety and Environmental Enforcement gave its own estimates, saying 22 percent of oil produced in the Gulf was shut down on Sunday, amounting to roughly 379,000 barrels of oil per day.

Some good news: Given that oil is now plentiful — the world is currently experiencing an oil glut — mitigates the impact of the Hurricane-fueled shutdown. "As more refineries go offline, there's less stress to the system because it's well supplied," Rob Smith, a director at IHS Markit, told CNN.

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