Extreme Cold Heats Up Gas Prices, Nearly 20% of Total U.S. Refinery Capacity Offline

February 22, 2021 ☼ gas-prices

Source: GasBuddy - Link

According to GasBuddy’s analysis, 11 refineries in Texas and one in Kansas have at least partially shut due to the extremely cold weather. Refineries are exposed to the elements, and unlike facilities in the northern U.S. which are prepared for cold weather, few refineries in the South have protection from these historically low temperatures. GasBuddy calculations show 3.48 million barrels of refining capacity were offline as of midday Tuesday, or nearly 20% of total U.S. refining capacity, just under the amount shut down due to Hurricane Harvey in 2017. Every day that these refineries are not operating the country is consuming more gasoline than it produces, swiftly impacting inventories. 

“Expect gas prices to rise more closer to the markets these refineries serve, primarily Texas, Louisiana, Alabama, Mississippi, Florida, Georgia, the Carolinas, and potentially even up the coast, as the Colonial pipeline carries refined products from the affected refineries as far as New Jersey. While other regions are also likely to see impacts to gas prices, the amount may be slightly less,” De Haan said. “Even after this event is over, it may take refineries days or even a week or two to fully return to service, and with gasoline demand likely to accelerate as we approach March and April, the price increases may not quickly fade.”

Dad was blaming Biden policies. I said no, it was refineries in Texas and Louisiana being knocked offline. Turns out it was refineries (cut production due to extreme cold); crude prices spiking because of slashed production last summer and fall and increased demand beginning in February due to warmer weather and increased vaccinations; and a few other minor things. Neither the Lundberg Letter, AAA, nor GasBuddy mentioned Biden policies.

That does not mean there won’t be prices rises due to those policies in the future. There will be, and there should be. They just haven’t come close to affecting the price at this time.