Analysts: BP refinery problems unlikely to hurt summer driving


Production problems at BP Texas City refinery won’t significantly impact gas prices through the busy summer driving season, analysts say.

The massive plant has been operating at about half-capacity this quarter as it tries to recover from the affects of power outages in April, which shut it down for three days and has left its operating rate hampered.

BP announced Tuesday that the refinery, typically capable of processing more than 430,000 barrels of crude oil a day, will continue to operate below its capacity through August.

While the April power outages – which affected Valero and Marathon refineries, as well – contributed to a five-cent hike in Houston gas prices during that spring week, analysts said the problems at the BP refinery won’t do much damage during the summer driving season.

The refining industry has been ramping up production after recent weather-related slumps and imports have been increasing to prepare for the busy driving season, said Andrew Lipow, a refining industry consultant based in Houston. The increased supply should help compensate for BP’s problems, he said.

Oil analyst Peter Beutel noted that anemic demand has put downward pressure on prices recently and that the crippled supply from the BP refinery is unlikely to reverse that trend.

The loss “certainly is not enough to ruin [the season] or put us in gasoline lines,” Beutel said. “But it certainly is enough to catch our attention.”

BP’s Texas City refinery is the third largest in the country by capacity, according to the U.S. Energy Information Administration.

The drought-related spring outages took more than 700,000 barrels of crude oil processing offline temporarily when it struck the BP, Marathon and Valero facilities.

A Valero spokesman said its Texas City refinery is now operating at planned rates. A Marathon Petroleum representative confirmed that its refinery is online, but wouldn’t comment further on the outage’s impact on the operation rate.

At BP’s refinery, both crude distillation and cracking trains shut down by the outage were running by the end of May, the company said. However, a catalytic cracker and one train of the residue hydrotreating unit remain impaired.

“Due to the impact of the emergency shutdown and restart, we are continuing to have operational issues associated with some key downstream units,” said BP spokesman Scott Dean in a written statement. “We expect to return the last of the impacted units to full capacity during August.”

Simone Sebastian

14 Responses

  1. chiefdecoy says:

    Can’t believe speculators did not seize the opportunity….
    They must be finally understanding that no matter what, the middle class and poor can not afford to run the roads at current prices…..

  2. John says:

    Joseph, I believe BP turned over $20 billion that the govt is handing out to legitimate claims. If they didn’t pay income taxes b/c they were paid in cash under the table, hard to prove the value…show me your W-2.

  3. John says:

    Who sells BP gas in Texas? I know I have never seen a BP station in Houston. I worked for BP in Ohio 20 years ago. Junk gas.

    You do realize that gasoline is fungible, which means when you pump your regular grade gasoline into your car at the pump, it could have come from any refinery.

    Junk gas…maybe you should educate yourself before you comment. I don’t buy that you used to work at BP in Ohio and not know this.

  4. Joe Dokes says:

    . . . . our gasoline prices are still some of the lowest in the world . . . what’s to gripe about . . . . there is an alternative . . . . . hoof it, sweethearts . . . .

  5. hank says:

    Hang the speculators and run BP out of the country. They’re a no integrity bunch of shysters that could care less about anything other than the bottom line.

  6. hare2share says:

    Passing up a perfectly good reason to raise fuel prices even higher? I must be dreaming…zzzzzzzzzzz

  7. honestabe says:

    Analyst are not traders. Speculation alone will drive the price up regardless of supply and demand. If you ever have been on the trading floor of an oil and gas house, news channels are broadcast all day long and as soon as this news is made public, phone traffic increases.

  8. Diane says:

    @Mike’s post, I didn’t actually see them raising the price but I noticed that yesterday morning a station that I keep my eye on for prices was at $3.33 per gallon at 6:45am and when I passed that same station yesterday afternoon at 1:30pm it was up to $3.43 per gallon. We were told that the gas prices would stay steady during the summer, but something happened to make them jump up yesterday.

  9. Zephyr says:

    Another chapter in sterling management by B(ritish) P(etroleum).

  10. Rob says:

    Hey 4merbuckeye, you are such a tool. Just because its a BP refinery does not mean that they only sell to BP stations. To answer you question, BP sells a lot of gas in Texas to other marketing groups that take the base feed stock and blend in their own additives (TCP2) so they can call it their brand and sell it.

  11. mike says:

    Yesterday I watched as the attendant at a valero station raised the price 17 cents at once!

  12. Joseph says:

    I’ll believe BP when they finish compensating all of the shrimpers and gulf coast residents decimated by their incompetence.

  13. 4merbuckeye says:

    Who sells BP gas in Texas? I know I have never seen a BP station in Houston. I worked for BP in Ohio 20 years ago. Junk gas.

  14. Myanmar Shave says:

    Summer drivers shouldn’t worry about BP
    Mind control headline.