After the Storm, Part 3 - Hurricane Harvey and the Importance of Gulf Coast Refined Product Infrastructure

It’s been more than a year since Hurricane Harvey dumped 50 inches of rain on Houston and its environs, but memories from those fateful days remain remarkably fresh. Harvey is not only unforgettable, it put a spotlight on just how important Texas refineries — and the refined-products pipeline infrastructure connected to them — are to the rest of the U.S. For several days, more than half of the Gulf Coast’s refining capacity was offline. Major pipelines transporting gasoline, diesel and jet fuel to the East Coast and the Midwest shut down too. But how do Harvey’s impacts on refining and refined products markets compare with the effects of other major hurricanes this century? Today, we conclude our series on Gulf Coast refining and pipeline infrastructure, and how a natural disaster along the coast can impact the rest of the country.

When one refinery along the U.S. Gulf Coast goes offline, as each does occasionally during a maintenance “turnaround,” the outage typically follows months of planning and supply-chain or storage adjustments designed to ensure supply agreements can be met and disruptions to fuel availability is averted. If the turnaround takes longer than expected, other refineries with processing availability can pick up the slack until the outage is over or imports increase. However, when large swaths of the refining infrastructure shut down in a short time as a result of a hurricane, the impacts can be far-reaching since stock levels may not be sufficient to offset the extended outage. Hurricane Harvey, which hit the epicenter of the Gulf Coast refining sector, serves as a prime example.

This is the third and final blog in this series, which takes a year-later look at Hurricane Harvey, its impacts and the lessons we can learn from it. In Part 1, we set the stage for the unfolding of events that happened during Hurricane Harvey. There, we noted that the Gulf Coast has by far the largest concentration of refineries in the U.S. with over 8.4 MMb/d of installed crude distillation capacity along a 650-mile stretch between Corpus Christi and southern Mississippi. We also discussed the pipeline networks that can supply refined products such as gasoline, diesel and jet fuel to markets as far away as New York City, Chicago, and Phoenix.