By Zain Shauk and Jeannie Kever
Houston Chronicle Staff Writers
Pump prices continued to rise as downgraded Tropical Storm Isaac drenched Louisiana, even though concern about gasoline supplies seemed to vanish Wednesday.
Isaac hampered oil companies for a third straight day, however, keeping workers away from massive plants and knocking out power to one of the many Gulf Coast refineries that had been shut down.
Ten Gulf Coast refineries with combined crude oil processing capacity of about 2.4 million barrels a day were offline or running at reduced rates Wednesday, according to the Oil Price Information Service. That includes about 10 percent of the nation’s gasoline production capacity, the service reported.
Refiners were preparing to assess the storm’s effects on their operations. Damage and flooding could delay workers from returning to evacuated facilities and restarting them.
Gasoline stockpiles were high, however, with about 68.9 million gallons in storage along the Gulf Coast, according to the U.S. Energy Information Administration. That is more than enough to make up for the estimated 900,000 barrels of dailygasoline production now offline, said Ben Brockwell, director of the Oil Price Information Service’s data, pricing and information service.
Retail gasoline prices continued to rise, however, with a gallon of regular jumping 5 cents nationally on Wednesday to $3.80, according to AAA. The average Houston pump price rose 4 cents to $3.62.
Wholesale gasoline surged 21 cents between Friday and Monday, as the market prepared for storm-related shutdowns.
Purchases by gasoline retailers ahead of the storm may have contributed to the increase, Brockwell said.
Crude oil prices fell Wednesday despite offshore production shutdowns. Ninety-five percent of Gulf of Mexico oil production was halted because of the storm, the U.S. Bureau of Safety and Environmental Enforcement reported, with more than 1.3 million barrels a day shut in.
Benchmark U.S. crude fell 84 cents to close at $95.49 in New York trading.
Phillips 66 loses power
The Louisiana Public Service Commission reported widespread power outages across the southern portion of the state, and Phillips 66 said Wednesday its 247,000-barrel-a-day Alliance Refinery in Belle Chasse, La., had lost power, three days after the company began taking it offline.
Valero Energy Corp.’s St. Charles and Meraux refineries remained shut down because of wind and torrential rain from Isaac’s remnants.
Valero spokesman Bill Day said skeleton crews took shelter inside the plants and will assess damage after the stormy weather diminishes.
Together, the two refineries can handle 410,000 barrels of oil a day
Valero’s Memphis, Tenn., refinery cut production Tuesday after Shell shut down its Capline pipeline that carries crude from the Gulf Coast to the plant.
Marathon Petroleum Corp. kept operating its refinery in Garyville, La., Wednesday, although below its capacity of 490,000 barrels a day. Spokesman Shane Pochard did not say at what level it was producing.
Likewise, Exxon Mobil said it its Baton Rouge refinery, with daily capacity of 502,500 barrels, was running at unspecified reduced rates.
Release from reserve?
Kenneth Medlock, an energy expert at Rice University’s Baker Institute, said the lack of detail is standard practice to avoid spooking markets before a storm passes and the extent of damage, if any, becomes clear.
But analysts and politicians have felt no such compunction in their chatter about releasing stockpiles from the Strategic Petroleum Reserve.
Medlock said a release would have almost no immediate effect on supply or prices.
“It takes time to arrange a release, because you’ve got to find takers,” he said. “Sometimes the announcement itself will have an impact. It can calm the market.”
But the global crude supply is strong, he said.
And Medlock said a release from the Strategic Petroleum Reserve would have virtually no effect on gasoline prices.
He suggested that a temporary relaxation of regulations governing the specific blend of fuels could ease price spikes. Former President George W. Bush did that after Hurricane Katrina in 2005, Medlock said, allowing neighboring states that require different blends of gasoline to share supplies.
“That can allow more free-flowing trade between regions,” he said. “That would have more impact in the short term.”