Federal officials should release fuel from the Strategic Petroleum Reserve to prevent gas prices from rising in the wake of Hurricane Harvey, Democratic Senator Edward Markey from Massachusetts told President Donald Trump in a letter on Wednesday.
“An immediate release of gasoline or crude oil, if also warranted, from the SPR would help protect consumers from price spikes at the pump and tame any market speculation that could be unduly affecting markets and harming consumers,” Markey wrote, according to The Hill.
The SPR was previously used in 2005, in the aftermath of Hurricane Katrina, and Harvey has been quite detrimental to oil production in the Gulf. Approximately 18.5 percent of production in the Gulf of Mexico has been shut-in and 13 refineries, which total to 20.9 percent of American refining capacity, remain closed. Currently, the reserve holds 678.9 million barrels of oil.
The effects of the shutdowns will reverberate well outside of Texas. For example, the massive refineries on the Gulf Coast send gasoline through a major artery to the U.S. Mid-Atlantic and Northeast. The disruption will mean that much of the country could see higher gasoline prices soon. The Gulf Coast also exported 2.7 mb/d of refined products in May, much of which was sent to Latin America and Europe.
In fact, as the world’s largest refined product exporter, disruptions in the U.S. will be felt around the world. “Any hiccup in U.S. refined product exports is highly disruptive to the supply chain given the dependency of nations like Mexico and other Latin American countries on the U.S.,” Michael Tran, director of global energy strategy at RBC Capital Markets, told Reuters. Worse, refined product output in Latin America has fallen recently, with Mexico and Venezuela most vulnerable to supply outages in Texas.