Cold Snap Knocks Out 15% of US Gulf Coast Oil-Refining Capacity

Chunzi Xu, Bloomberg News

, Source: Wood Mackenzie

(Bloomberg) -- Severe winter weather has shut about 15% of the US Gulf Coast’s oil-refining capacity, hampering a key hub for crude processing and exports.

That’s about 1.5 million barrels a day of fuelmaking capacity offline as of Wednesday, according to data from Wood Mackenzie. Extreme cold can freeze lines and make equipment malfunction at Texas facilities not used to frigid conditions, while power outages can force entire plants to shut suddenly, according to Lee Williams, senior research analyst at the consultancy.

The outages are likely to be short-lived, with temperatures — which had plunged below 20F earlier this week in Texas — already starting to rebound, Williams said. However, some of the shutdowns may run into a heavy spring maintenance season.

The disruptions come at a time when refiners had ample supplies of fuel on hand, limiting the effect on prices. Gulf Coast inventories of gasoline and distillates had swelled by more than 14 million barrels in three weeks, government data show.

Read More: U.S. REFINERY INSIGHTS: Texas Refineries Brace For Winter’s Bite

US gasoline prices were at $3.094 a gallon, nearly 30 cents below this time last year, according to American Automobile Association pump prices. Though prices have risen in the past few days, that’s mostly due to oil’s increase.

The cold snap has also shut in some crude output. As much as 550,000 barrels a day of oil production in North Dakota was offline as of Thursday. That’s down from as much as 700,000 barrels a day that was out on Wednesday.