NEW YORK -- Gasoline prices jumped to unprecedented levels in the wholesale markets Thursday as Hurricane Ike tore across the Gulf of Mexico, threatening to strike Texas and its refineries, said the Associated Press. The wholesale price of gasoline ranged from $4 to nearly $5 a gallon at the U.S. Gulf Coast on Thursday, Tom Kloza, publisher and chief oil analyst of the Oil Price Information Service, Wall, N.J., told AP. That is up significantly from about $3 to $3.30 a gallon on Wednesday, Kloza said.
"We're looking at the highest wholesale prices ever for a huge swath of the country," [image-nocss] he said. "People understand that regardless what happens with Ike, it's going to shut down the biggest refining cluster for a period of five, six, seven days."
In an alert issued yesterday, Tom Kloza of OPIS said, "Hurricane Ike has inspired a panic that perhaps even exceeds the panic witnessed after Hurricane Katrina knocked out four refineries for more than half a year. Gulf Coast trading [Thursday] morning is absolutely frantic, and we have seen spot deals done at $4.25 a gallon, then again above $4.50 a gallon, with current offers near the $5.00 a gallon neighborhood. All of this is rooted in the belief that Ike will put another huge chunk of refining capacity on the shelf, at least until late September."
Light, sweet crude for October delivery fell $1.62 cents to $100.96 a barrel on the New York Mercantile Exchange, after dropping as low as $100.85 a barrel in electronic trading. The contract fell 68 cents on Wednesday to settle at $102.58—the lowest close since April 1.
"It's a strange, strange world here," Kloza said. "You might see an extraordinary thing—you may see crude oil less than $100 and retail gasoline more than $4 a gallon."
Ike, arriving on the heels of last week's Hurricane Gustav, was expected to blow ashore early Saturday somewhere between Corpus Christi and Houston, with some forecasts saying it could become a Category 4 storm. On Thursday, Ike was a Category 2 storm with winds near 100 mph (161 kph). It was churning about 645 miles (1,038 kilometers) east of Brownsville, Texas, and moving west-northwest at near 9 mph (14.5 kph), after tearing through Cuba and killing at least 80 people in the Caribbean.
Texas is home to 26 refineries that account for one-fourth of U.S. refining capacity, and most are clustered along the Gulf Coast in such places as Houston, Port Arthur and Corpus Christi. Exxon Mobil Corp.'s plant in Baytown, outside Houston, is the nation's largest refinery.
Refineries are built to withstand high winds, but flooding can disrupt operations and—as happened in Louisiana after Gustav—power outages can shut down equipment for days or weeks.
In its latest update by presstime, Valero Energy Corp. said it is concluding the shutdown process at its 245,000-barrels-per-day (bpd) Texas City refinery and its 130,000-bpd Houston refinery. The 325,000-bpd Port Arthur refinery will continue to operate at minimum rates. "We will continue to monitor Hurricane Ike, and we will respond with further steps at Port Arthur if necessary," said spokesperson Bill Day. "Additional company-operated retail sites have been closed in the Houston area due to evacuation orders. Valero continues to work with the state of Texas on plans to keep fuel stations along evacuation routes supplied as long as possible."
Valero also has ordered employees at 12 convenience store locations near the Texas coast to evacuate, reported The San Antonio Business Journal. "We anticipate that more stores will close as their areas evacuate," Day told the paper. Click herefor Valero storm updates.
On its website, Shell said, "Given the mandatory and voluntary evacuations, Shell-branded stations continue to experience a spike in demand. In Houston and the surrounding areas, approximately 30% of Shell-branded station area experiencing outages as of 2 p.m. [Thursday]. These station outages are temporary and sporadic as tank drivers and station operators continue to work diligently to refill stations. Deliveries have been prioritized along evacuation routes and major arteries, but have been slowed as a result of evacuation traffic. Tank drivers will continue to make deliveries as long as it is safe to do so and Shell-branded stations will remain open as long as possible. As always, safety is the number one priority and tank drivers, Shell-branded retailers and wholesalers and their employees may need to evacuate the area as the storm moves closer. Safety stock at terminals is strong and generators are ready to be deployed to strategic locations where power is an issue. Once the storm has passed, we will begin restocking stations as soon as it is safe. Additional tank trucks have been secured to help expedite the refueling process." Click herefor Shell storm updates.
BP was shutting down its Texas City, Texas refinery ahead of Hurricane Ike, company spokesperson Scott Dean told Reuters Thursday.
Exxon Mobil Corp. was shutting its 567,000-bpd refinery in Baytown, Texas, on Thursday due to Hurricane Ike, spokesman Kevin Allexon told Reuters. The company's 349,000-bpd Beaumont, Texas, refinery was continuing with normal operations, he said. "County officials have ordered a mandatory evacuation of the area where the refinery is located, so, accordingly, we are in the process systematic and safe shutdown of operations," Allexon added. Click herefor Exxon storm updates.
Some stations in the Houston area are running out of fuel amid a spike of up to 40% in fillups as Ike bears down on the Texas Gulf Coast, reported The Houston Chronicle. The spectacle of lines at gas stations—and nozzles at empty pumps covered with plastic bags—conjured memories of when Houston was drained dry amid the frenzied evacuation ahead of Hurricane Rita three years ago.
Tanker trucks are filling up at gasoline terminals, but the surge in demand has caused a bottleneck that means it is taking longer than normal to restock stations, Chris Newton, president of the Texas Petroleum Marketers & Convenience Store Association, told the paper. "We have gotten reports of spot outages, and everyone is doing their best to remedy those situations," Newton said.
Fuel distributor Sun Coast Resources was working "triple time" yesterday to ensure stations were adequately supplied with gasoline and diesel fuel, said operations manager Bill Tilger. He reported no supply problems at stations served by the Houston-based company, though sales volumes are up. He said that in previous storms many Houston-area drivers waited until the last minute to fuel up vehicles, but that the response seems more measured this time.
Link Smith, co-owner of Dickinson-based fuel distributor Bay Oil, which supplies about 140 stations in the Houston area, said the volume of gasoline purchased in the Houston area spiked by 30% to 40% ahead of Ike's arrival. At a Bay Oil-owned station in La Marque, customers bought 8,000 gallons of regular unleaded between 5 a.m. and 10 a.m. yesterday. Smith said that quantity typically lasts two days. He said some stations are out of fuel, but most stores in areas near the coast and in metro Houston remain supplied with premium gasoline if not regular. "So far, this is going a lot smoother than Rita," Smith said.
But he said keeping stations supplied with fuel grew more difficult today. Smith said lines at fuel racks, where trucks obtain fuel for delivery to stations, were adding as much as two hours to turnaround times. And trucks returning from Galveston and other areas south of Houston faced heavy traffic, also slowing deliveries. "Normally, we can make four loads on one shift," Smith told the paper. "Now, we're doing about two."
Newton said the bottleneck has caused delays up to four hours or more for tanker trucks to fill up at gasoline terminals. "It's taking longer to get the tanker trucks into the terminal and out of the terminal to retail stations," he said. He added that as refiners and terminals shut down before the storm reaches the Gulf Coast, other gasoline terminals in the state are ready to stock tanker trucks to bring fuel to the Houston area.
Terry Wilkerson, president of the Mississippi Petroleum Markers& Convenience Store Operators, said that wholesalers set an allocation of gasoline for each store and that is why some stations, are asking customers to limit their purchase to 10 gallons, reported WAPT-TV.Tom Crosby, spokesperson for AAA Carolinas, told The Spartanburg Herald-Journal that he does not expect widespread gasoline shortages, although some stations could run short, but customers will likely be paying more for available fuel, at least through the weekend. He said many stations likely will raise prices in anticipation of an interruption in supply.Junie White, owner of White's Pine Street Exxon, told the paper he raised his price 10 cents per gallon Tuesday morning and knocked it up another four cents Wednesday, hoping the higher prices will slow down sales and keep him from running out. "We aren't going to be able to get another load of gas until Saturday," White said Wednesday evening. "We tried to order a load this morning, and because of what's going on in the Gulf, we were told it would be Saturday before we could get it."
White's station can store 30,000 gallons of gasoline and another 10,000 gallons of diesel. He said he is not worried about long-term problems in supply, but he does not want to run out this week as Ike threatens the Gulf.
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