Hurricane Harvey and Its Effect on Oil and Gas
Hurricane Harvey has cost people their possessions, homes, and in some cases, their lives. The final tally for the cost to make all of the necessary repairs continues to grow. As of right now, the estimated cost of Hurricane Harvey sits at $190 billion. It is still unclear how much time, effort, and money will need to go into the reconstruction of Texas after the devastation of Hurricane Harvey. There has also been a major effect on several companies and industries, primarily the oil and gas industry.
Production of oil and gas has been disrupted and gas prices have risen in the aftermath of Hurricane Harvey. Around 30% of the oil refining capacity in the United States has been wiped out. There are nationwide concerns about the country’s fuel supplies. In turn, this has caused gasoline prices to jump.
In the products market alone, there have been disabling disruptions to production that have even caused some production lines to halt completely. Energy Aspects quoted that roughly four million barrels of refining capacity were unable to be used every single day post Hurricane Harvey. The biggest pipeline from the US Gulf Coast to the US East Coast had to be shut down because it was hit during the hurricane and there weren’t enough products to properly supply it. Therefore, inventories have also seen a drastic reduction. This has been a major issue across the board because other shipping channels and ports that operate in the Texas area have been disrupted or even shut down during and after the hurricane. In other words, no products are coming in or going out of Texas. These impacts have been felt well beyond just the state of Texas. Since the US is also a major exports of oil products, there have been price increases across the globe.
Looking Forward To Recovery
It remains to be seen how quickly and effectively the oil and gas industry within Texas will be able to recover, let alone the actual state of Texas. Fortunately, there hasn’t been a significant amount of damage to the actual refineries, which is good news. However, the flooding that has occurred could potentially create more (and longer lasting) damage because water in the oil pumps or in the oil cookers can be a huge hazard when restarting your machinery and processes.
In an interview with the New York Times, Deputy Director of the Energy Institute at the University of Texas at Austin, Michael E. Webber, urges oil companies to invest in hardening the infrastructure on their Gulf Coast operations as a step towards the road to recovery. Oil and gas companies cannot predict when a hurricane will occur, but investing in additional support for already existing structures can hopefully prevent an aftermath like the one Hurricane Harvey left behind.