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Harvey is cutting output at America's largest oil refinery

Tropical Storm Harvey’s unusually prolonged battering of the Gulf Coast, including a “second landfall” today, is increasing pressure on the region’s crucial energy infrastructure. Among the latest casualties: America’s largest oil refinery.

The Motiva refinery in Port Arthur, Texas, said late Tuesday that it is operating at about 40 percent capacity, down from a previous estimate of 60 percent. At normal capacity, it processes 600,000 barrels of crude oil a day into gasoline and other fuels for consumers and industry.


With the Motiva slowdown, about one-fifth of the country’s energy-refining capacity is now shuttered due to Harvey, according to Reuters. The shutdowns have already pushed the wholesale price of gasoline to a two-year high.

(We won’t know for sure about the effect on consumer prices at the pump for another few days, as it takes awhile to gather that data via surveys of individual service stations. But the high-percentage bet is that the cost of filling up is about to rise.)

For crude oil — the raw input for the refineries — Harvey has had the exact opposite effect. Since the shuttered refineries are unable operate, it effectively cuts demand. As a result, crude oil prices have fallen in New York trading every day so far this week, in a four percent decline.

Other details to watch:

– The Gulf’s refineries may take more than a week to get back up to full speed, according to Reuters.

– Saudi Arabia’s state-owned oil company, Saudi Aramco, owns the Motiva refinery through its Saudi Refining unit. The facility occupies 1,400 acres and employs more than 1,500 people, according to its website.

– One barrel of crude or refined fuel equals 42 gallons. The measurement, now customary in the energy industry, dates back to around the time the first U.S. oil deposits were discovered in Pennsylvania in the nineteenth century.