Ukraine Crisis, Louisiana Refinery Explosion Could Send Gas Prices Rising
Gas prices in Acadiana are at or above $3.00 per gallon, and those prices could soon push even higher.
The crisis in Ukraine has already pushed crude oil prices to their highest levels since 2014. Brent Crude, the international benchmark, is trading around $97 per barrel as of noon Tuesday. Earlier in the day, the Brent Crude price reached as high as $99.
The American benchmark, West Texas Intermediate Crude, is trading around $93 a barrel at noon on Tuesday. That's nearly two dollars higher today than they were at close on Monday.
Geopolitics may keep oil prices rising for the foreseeable future.
OPEC says it's prepared for $100-per-barrel prices. Several countries in the cartel say they see no need to boost oil production to lower the price, despite some objections from other members and from Russia. Russian energy minister Nikolai Shulginov said that the optimal price of oil would be between $55 and $70 per barrel.
Regardless of what's going on overseas, an incident in our backyard may have a more immediate impact on local gas prices.
Monday's explosion at the Marathon refinery in Garyville rocked one of the nation's largest gasoline refineries in the nation. According to Marathon (via their website):
Our Garyville refinery is located along the Mississippi River in southeastern Louisiana between New Orleans and Baton Rouge. It has a crude oil refining capacity of 578,000 barrels per calendar day (bpcd).
The Garyville refinery is configured to process a wide variety of crude oils into gasoline, distillates, fuel-grade coke, asphalt, polymer-grade propylene, propane, refinery-grade propylene, dry gas, slurry and sulfur. Products at the refinery are transported by pipeline, barge, transport truck, rail and ocean tanker. The refinery has access to the export market and multiple options to sell refined products. A major expansion project was completed in 2009 that increased Garyville’s crude oil refining capacity, making it one of the largest refineries in the U.S.
There's no word on how long that refinery will be offline. However, the explosion threatens to further reduce refining capacity in the southern United States and bumping gas prices even higher. According to a Bloomberg report, 10 percent of the region's refining capacity is already shut down for repairs.