US Energy Dept releases 500000 barrels from strategic reserve

Everyone will feel a pinch at the gas pump from Harvey

Energy Secretary Rick Perry announced the release of 1 million barrels of crude oil from the federal Strategic Petroleum Reserve in response to refinery outages caused by Hurricane Harvey. Trump wants to sell off half the reserve.

If Friday's market showing suggests that prices are seesawing with no discernible trend to the positive or negative, that's normal until a clearer picture of Harvey's short- and long-term impact on the energy industry is obtained, say analysts: "We're continuing to assess the refining sector and its ability to come back from Harvey", stated John Kilduff, founding partner at Again Capital.

Harvey shut about a quarter of the country's refining output after it hit Houston with record floods before it spread to Louisiana.

The Colonial Pipeline provides almost 40 percent of the South's gasoline.

"The department will continue to provide assistance as deemed necessary, and will continue to review incoming requests for SPR crude oil", Energy Department spokeswoman Jess Szymanski said in a written statement, using an acronym for strategic petroleum reserve.

"They're going to go up", said Perry, who is traveling to Texas on Thursday with Vice President Mike Pence.

Three million barrels of the reserves will reach Marathon Petroleum Corp and another 500,000 bpd will reach Valero Energy Corp. from the reserves at the Bayou Choctaw site, according to Bloomberg. Prior to that, exchange agreements also occurred in 2008 during Hurricanes Gustav and Ike.

But if you look at just gasoline, that 1 million barrels of oil would produce about half a million barrels of gasoline, according to James Williams, energy economist at WTRG Economics. The sale was the first in a series of planned draw-downs through 2025 totaling nearly 190 million barrels, or 27 percent of the reserve.

World energy markets, from butane in Asia to gasoline in Latin America and diesel in Europe, are feeling the ripple effect of the storm, highlighting the growing importance of the USA for the global oil industry.

About a fifth of the nation's refining capabilities were knocked out by Hurricane Harvey, the Dallas News reported. Today it ships more than 6 million barrels a day of crude and fuels, an increase driven by a boom in shale production, the end of a ban on crude exports and the expansion of several refineries.

"Hurricane Harvey has been far more devastating for US energy infrastructure than anyone could have imagined even a week ago", said Dave Ernsberger, global head of energy at S&P Global Platts.



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