U.S. gasoline hits $2/gal as Harvey wreaks havoc on refiners

SINGAPORE- 31 August 2017: Gasoline prices in the United States hit $2 a gallon for the first time since 2015 on Thursday as flooding from storm Harvey knocked out almost a quarter of U.S. refineries, while crude prices remained weak as demand dropped following the outages.

Harvey has battered the U.S. Gulf coast since last Friday, ripping through Texas, Louisiana and the heart of the U.S. petroleum industry. At least 4.4 million barrels per day (bpd) of refining capacity was offline, based on company reports and Reuters estimates.

Amid fears of a supply squeeze, U.S. gasoline prices RBc1 on Thursday jumped to $2 per gallon for the first time since July 2015, and traders from Europe to Asia were scrambling to fix fuel cargoes to the United States.

Goldman Sachs said it could take several months before all production could be brought back online.

“While no two natural disasters are similar, the precedent of Rita-Katrina would suggests that 10 percent of the ... currently offline capacity could remain unavailable for several months,” the bank said.

While gasoline spiked, crude markets remained weak after already falling sharply the previous day. The closure of so many U.S. refineries has resulted in a slump in demand for the most important feedstock for the petroleum industry.