Houston, the country’s fourth largest city, is a hub for the nation’s oil refineries. Harvey has resulted in more than 20 percent of refining capacity along the Texas Gulf Coast to cease, and it may take a while to ramp production back up to pre-storm levels. As a central hub of crude oil refineries domestically and internationally, Texas also acts as a critical juncture for pipelines and refineries.
In the aftermath of the hurricane, oil prices fell following a glut of unrefined oil that started to accumulate as refineries shutdown. A shortage of gasoline supplies then developed as refineries failed to produce fresh supplies. It may be weeks before most of the shut down refineries are back online and producing at pre-storm capacity. Gasoline and jet fuel supplies to the east coast were especially susceptible to the closed refineries.
Data from the EIA shows that the average price for all grades of gasoline rose from $2.46 to $2.74 nationwide, while the price of West Texas Intermediate (WTI) crude oil fell from $47.39 to $46.40 per barrel.