As a result of the flood damage caused by Hurricane Harvey, fuel prices are rising across the country – but curiously, crude oil prices have dropped at the same time.
In the oil-producing Gulf region affected by the storm, eight Texas refineries have been shut down with as much as 2.7 million barrels per day of oil processing potential, according to the Oil Price Information Service. In the most recent report from the Energy Department, diesel prices hit a yearly high of $2.60 per gallon on average for the week, but the price reflected less than 1 cent of increase nationally. Much of the price increase will likely be reflected in next week’s numbers, as rain and flooding from Harvey could continue until Thursday, Aug. 31.
While the refineries were shut off as a precaution for the storm, flood damage has occurred at some facilities. ExxonMobil revealed that its Baytown and Beaumont refineries were flooded and unable to contain certain chemical pollutants as a result.
The immediate area of the Gulf States and the Northeast are expected to be hardest hit by the interruption in oil refining capacity, with OPIS saying that unbranded fuel prices will increase in most parts of the U.S. as well.
The hurricane is having the opposite effect on crude oil, however, with prices hitting their lowest point in two months, according to CNN Money. With so many refineries shutting down, the demand for crude oil has slipped as well, and a glut of supply from the shale oil industry is also offsetting the storm’s effect on prices. Demand was also decreased because Houston, the fourth largest metropolitan area in the U.S., has been put out of commission, so the need for gas and diesel fuel in the area is low while roads are flooded and businesses are closed. As much as 30% of Harris County, which contains Houston, is currently under water.
President Trump arrived in Corpus Christi to meet with state and local officials about the ongoing disaster response. In a briefing, he told residents of his intentions to get this disaster response right, saying, “We want to be looked at in five years, in 10 years from now as; this is the way to do it.”
It may be a long-term commitment, as Harvey is already one of the most devastating single storms in U.S. history, dropping over 50 inches of rain in some locations, with only Hawaiian mountain peaks ever having reported higher rain totals. The deluge has dropped over 9 trillion gallons of water so far, and Tuesday caused a reservoir to spill over for the first time, potentially adding to the flooding.