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Some of the largest oil refineries in Texas could take weeks to restart as they would need to repair the damages from the big Texas freeze, Bloomberg reports, citing sources with knowledge of the situation.
The Baytown and Beaumont refineries of ExxonMobil, Marathon Petroleum’s Galveston Refinery in Texas City, and the Port Arthur refinery operated by Total are expected to be down for at least several weeks as the winter storm caused damage to the facilities.
Those four refineries have a combined refining capacity of 1.76 million barrels per day (bpd) - Marathon’s refinery has a 585,000-bpd capacity, Exxon’s Baytown refinery can process 580,500 bpd, and its Beaumont refinery has a 369,000-bpd capacity. Total’s Port Arthur facility has a capacity of 225,500 bpd.
Weeks of shut refineries in the Gulf Coast will tighten gasoline supply in the U.S. and lead to hikes in gasoline prices, which are already evident this week.
Many more refineries were shut down at the start of the Texas Freeze. IHS Markit estimates that almost 6 million bpd of refining capacity, including 5.2 million bpd of the capacity in the Gulf Coast and 730,000 bpd of refining capacity in the Midwest, was impacted.
According to GasBuddy’s analysis, 11 refineries in Texas and one in Kansas have at least partially shut due to the extremely cold weather. The national average price of gasoline may jump over the next two weeks by 10-20 cents per gallon from its current price of $2.54 per gallon as a result of the refinery shutdowns, GasBuddy said on Wednesday.
The national average could even increase toward $3 per gallon closer to Memorial Day weekend as refineries eventually begin to switch over to EPA-mandated cleaner summer fuels.
“While a $3/gal national average is far from guaranteed, the odds are certainly rising,” GasBuddy said.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com