Harvey, downgraded to a tropical storm and losing steam as it moved inland, killed more than 40 people and brought record flooding that shut at least 4.4 million barrels per day (bpd) of refining capacity. The state's 11 oil refineries are responsible for fuel production and do not rely on outside facilities. Strong levels of oil production have thankfully left the country with ample stockpiles of gas and oil that can cushion the impact of Harvey. Valero also announced the shutdown of its Port Arthur refinery on Wednesday afternoon.
"There's a huge logistical challenge going on at the moment because those refineries up and running don't have access to the oil they need", said Smith.
The spread between Brent and USA crude hit its widest in more than two years on Wednesday before settling at $4.90.
Gasoline margins climbed, as the gasoline crack spread jumped to $24.02 a barrel early in the session, the highest on a seasonal basis since 2012. We now have 10 refineries down.
The size of the storm is one thing, but the gas industry was already maxing its output before Harvey made landfall in Texas last Friday, he explained.
The Phillips 66 plant was untouched by the storm, which had significantly affected USA refinery and production capacity in the Gulf of Mexico.
Two of the nation's largest oil refineries have been shut down because of Harvey, causing the nation's average gas price per gallon to rise to $2.51. "We expect the national average to top $2.60 a gallon".
Flooding from tropical storm Harvey caused ongoing large-scale USA refinery outages on Tuesday, while crude prices rose on the back of supply disruptions in Colombia and Libya.
However, there are ripple effects. Explorer shut two main lines carrying fuel to the Chicago market Tuesday.
AAA said drivers should not be alarmed.
Elsewhere on Nymex, the U.S. West Texas Intermediate crude October contract was at $45.97 a barrel, little changed on the day. Goldman Sachs estimates that the storm has left the market short of about 1.1 million barrels per day of gasoline. A week later, as the state deals with the continued threat of flooding, several Gulf Coast refineries are among the businesses still dealing with the fallout - and Florida drivers are feeling it at the pump.
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