Al Jazeera

Hurricane Harvey’s impact on the US oil industry

Published 15:00 2nd Sep 2017.

Amrita Sen appears on Al Jazeera (5.34 minutes in) to discuss the potential global repercussions of Hurricane Harvey on the oil and gas industry

"Preliminary estimates put the economic cost at 190 billion dollars, making it the costliest natural disaster in US history. 

Harvey has also swamped one-third of oil refining capacity of the US. It could be weeks before refineries return to full operation. This has caused huge concerns about fuel supplies. Prices for refined products like gasoline have jumped. 

"There's obviously been severe disruptions in the products market, nearly four million barrels per day of refining capacity was offline," says Amrita Sen, chief oil analyst at Energy Aspects. 

"The major pipeline that goes from the US Gulf coast, where Hurricane Harvey hit, to the US East Coast has been shut because they don't have enough products to supply and therefore it is likely that you're going to see inventories are drawn down a lot," she continues. "Right now, there's enough in stock but if this persists for longer, then there's a risk of shortages."

Sen explains that the disruption is already being felt well beyond the state of Texas. "The US is now a major oil products exporter," she says. "You've already seen global gasoline and diesel prices soar on the back of this because now the world relies on US supplies of these products, so you are going to get a knock-on impact globally as well." 

Prices for crude oil, meanwhile, have taken a dive, as demand from the oil refineries which have been affected by Hurricane Harvey has dried up. 

Whether the US will be able to make a speedy recovery remains to be seen, says Sen. "From Hurricane Harvey landfalling, there hasn't been a significant amount of damage done to refineries, which is the good news. The bad news is that flooding actually can cause far more sustainable damage because if you've got water in your pumps or in your cokers that can take a lot longer and potentially can be quite dangerous when you're restarting," she says. "

Watch on aljazeera.com