The cold spell attacking Texas this week may be boosting oil prices, but it’s also causing oil refineries to shutter and pipeline operators to restrict their flow.
On Monday, President Joe Biden declared an emergency over the brutal weather that hit the Lone Star State, which ultimately resulted in rolling blackouts.
Anonymous Bloomberg sources suggest that the losses to U.S. production by day is more than a million barrels. Crude oil production in the Permian Basin alone was estimated at 4.333 million barrels per day, according to the EIA’s Monthly Drilling Productivity Report.
Texas is home to three of the United States’ largest oil refineries, including Exxon’s Baytown Refinery, Marathon Petroleum’s Galveston Bay Refinery, and Motiva’s refinery—the largest in the United States—in Port Arthur. Combined, those three refineries process nearly 2 million barrels of crude oil per day.
Motiva’s refinery shuttered on Monday after temperatures dipped into single-digit territory. Marathon’s Galveston Bay refinery has shut down most of its units.
And the power outages in the Permian may result in oil production shut-ins as well, as the power outages are expected to continue.
Oil and gas pipelines are also affected, with Enbridge’s half-a-million-barrel-per-day Flanagan South Pipeline shuttered due to power outages. Flanagan South (Line 59) runs from Illinois to the main distribution hub in Cushing, Oklahoma.
The price of WTI crude hit above $60 on Monday morning.
Crude oil production in Texas reached an average of 4.653 million barrels per day in November—the last month for which there is data—according to the Energy Information Administration. This is down from well over 5 million barrels per day pre-pandemic.