This map shows the 6 meter (20 foot) flood zone from sea level rise. It’s likely the worst-case for the storm surge. Feel free to scroll around, especially up to Port Arthur on the Texas-Louisiana border.
This site has all the oil refineries in the US on it. Zoom in on the Houston area and compare the two maps. If you look closely at Texas City, between Galveston and Houston, and well within the 20 foot flood zone, you’ll find three refineries – BP Products North America, Marathon Petroleum, and Valero – and there’s another close to Houston that might also be flooded, depending on how big the surge is when it reaches the Houston Ship Channel – ExxonMobil Refining.
If you drag the refining map over to Port Arthur, there’s two more that might be hit of the storm surge gets into Sabine Lake (unlikely, but possible) – Valero’s Port Arthur Refinery and Motiva Enterprises.
The three at highest risk combine to refine 798,000 barrels of oil a day. Add the ExxonMobil refinery and that jumps to 1.384 million barrels of oil per day. And if the two Port Arthur refineries I mentioned are damaged, then that’s another 565,000 barrels per day.
And if we include the other four refineries that are out of the flood zone but still in high wind damage areas (i.e. Houston), that’s yet another 860,000 barrels per day of oil refining capacity. Outside the flood area of Port Arthur are two more refineries with another 603,000 barrels of capacity at risk.
All told, Ike has the potential to directly damage via storm surge, wind, and rain-driven flooding 12 refineries in Houston and East Texas that combine to refine 3.412 million barrels of oil per day. As of the end of last week, the EIA data says that total barrels of oil refined in the U.S. was 13.483 million barrels. These 12 refineries at risk represent 25.3% of the entire U.S. refining capacity.
Categories: Energy, Infrastructure, United States
So…what’s the worst case scenario here, guys? Strategic oil reserves won’t mean squat here. Are we talking localized/regional shortages? $5 a gallon gas? Both?
Worst case would be if all of them were damaged sufficiently that it takes something like 6-8 weeks to repair them: Immediate effects (ie over the next week or so) will be pretty minor – I read that there’s something like 6 weeks of refined gasoline available at all times. “Pretty minor” means $5.00 gas, though. After a couple of weeks, however, a 25% reduction in gas production would force the government to step in a la the 1970s and ration gasoline until the refineries were back on line, or prices would skyrocket until the price controlled the demand enough that people cut consumption back voluntarily by 25%. I don’t know enough about the market to say what that price would be, but it’s probably somewhere between $6 and $10 per gallon. Rationing/high prices would last until all the refineries were back on line or until the US could import enough gasoline from other countries.
Alternatively, the US is a net gasoline exporter, so the Feds could cancel the export contracts and cause the exporters massive losses but mitigate some of the other effects like rationing and price hikes.
Really, though, these are logical guesses on my part – I’m not an expert on gasoline and oil supply and demand.
Here’s what Bloomberg had to say:
Not that tapping the SPR will do any good, though, if the problem is refining rather than Gulf oil production.
Another one
Gas is at $5.35 a gallon here in southside VA/northern NC this morning, Brian. It was $3.45 yesterday afternoon. I realize that the damage to refineries is a serious thing – but it’s not stopping rampant gouging already.
Good old disaster capitalism rears its ruthless heads.
Prices here had jumped less than a dime as of last night, but bet your sweet ass I filled up as soon as I left the office yesterday. I’m afraid to think what it will be out there today.
It’s Sunday night at 10PM, and gasoline contracts are trading at $2.7696/gal, down $0.0872 with heavy trading at the NYMEX. I’m not surprised at all.
Jeff