Beginning February 13, 2021, a major winter weather system characterized by extreme cold spread across much of the central United States, disrupting energy systems and causing serious health and safety issues. The extreme weather particularly affected Texas, where utility customers experienced widespread outages and rolling blackouts. The severe weather persisted through much of the week, putting significant pressure on the petroleum complex along the U.S. Gulf Coast, where the infrastructure has rarely needed to accommodate sub-zero temperatures, as well as some states in the Midcontinent. Several Texas refineries accounting for a significant share of total U.S. refining capacity fully or partially shut down, numerous inland crude oil wells closed, and oil pipeline infrastructure was disrupted. The extreme cold also affected petroleum product pipelines; production and refinery operations in the Midwest and inland regions of Texas; and briefly disrupted maritime traffic along the Houston Ship Channel, a crucial waterway for crude oil and petroleum product trade flows.
Although most of the extreme weather appears to have passed, ongoing low temperatures are expected to continue through the week of February 22, according to updates from the U.S. Department of Energy’s Office of Cybersecurity, Energy Security, and Emergency Response. The recovery timeline for affected market participants remains unclear. Reported infrastructure damages potentially indicate that operations could take multiple weeks before returning to normal in several instances.
The Gulf Coast, which EIA tracks as the Petroleum Administration for Defense District (PADD) 3, accounts for more than half of total U.S. refinery capacity, and Texas alone accounts for 5.9 million barrels per day (b/d) of capacity, or about 32% of total U.S. capacity. Weather-related disruptions occurred primarily at several refineries in the Texas Gulf Coast refining region within PADD 3. By the peak of the weather’s impact on February 17, several refineries had announced either substantial or complete shutdowns as a result of external power outages, constrained natural gas supplies, logistical disruptions, or damage to process units because of the week’s cold temperatures and extreme weather. Other refineries in the area that were not forced to shut down capacity still faced similar complications and reduced run rates. In total, according to trade press and company announcements, an estimated 3.7 million b/d, or 20% of total U.S. refining capacity, was shut in as a result of the weather. As much as 5.7 million b/d (31% of total U.S. refining capacity) was affected by the weather to some degree, either as shutdowns or continued operations, but with reduced utilization. Most of the disruptions and shutdowns were announced on or about February 15 among refiners in the Beaumont/Port Arthur, Houston, and Corpus Christi regions of Texas, although refinery issues extend across several states.
Based on the U.S. Energy Information Administration’s (EIA) Weekly Petroleum Status Report (WPSR), gross inputs of crude oil and other feedstock to U.S. refineries declined 2.7 million b/d (17.5%) to 12.6 million b/d for the week ending February 19, 2021. The shutdowns resulted in a weekly decline in the gross inputs to Gulf Coast refineries of 2.4 million b/d (27.5%) to 6.3 million b/d, the largest weekly decline since the impact of Hurricane Harvey in September 2017 (Figure 1). The closures will likely continue to affect petroleum markets in the coming weeks, reducing demand for crude oil and production of refined products such as motor gasoline and distillate fuel oil.
As the cold weather begins to abate, refineries that were forced to temporarily shut down as a result of the extreme weather will likely require at least three to five days to resume operations, assuming the facilities ceased operations in a controlled manner, without any emergency unit upsets or damage from the cold. However, several regional refiners have already announced that cold temperatures damaged some of their units, which suggests a possible longer recovery period. As of February 22, most of the affected refiners were still shut-in or operating at reduced capacity, and news services indicated that they would remain shut or partially shut for several weeks. According to Reuters, Motiva’s Port Arthur refinery announced it would begin a 17-day restart process, and Marathon’s Galveston Bay refinery said it had restarted some units but still needed to make repairs before resuming operations. Argus reported that all three Corpus Christi refineries were in the process of resuming operations. Restarts are also reportedly underway at ExxonMobil’s Baytown and Beaumont refineries, but previous reports have indicated some damage at these facilities that may require additional time to bring them back online. Broader infrastructure issues associated with the cold weather, such as disrupted power grids, road closures, personnel complications, continued logistical disruptions on key waterways, and possible damage or delays to crude oil pipeline systems present further sources of uncertainty to the Texas Gulf Coast refining system beyond the difficulty of restarting the refinery units.
Gulf Coast refineries historically run at relatively lower rates during February because of lower seasonal demand for refined products and maintenance schedules. In addition, Gulf Coast refineries likely faced additional pressure to run at lower rates because of ongoing low product demand as a result of responses to the COVID-19 pandemic. As a result, the effect of reduced refined product output because of weather-related shutdowns may be less significant than if the weather conditions had occurred during a period of higher product demand. Nonetheless, depending on the length of the outages and when affected refineries resume full operation, refined product output may remain reduced, likely resulting in further draws on inventories and upward pressure on product prices. As of February 19, 2021, gross production of motor gasoline by Gulf Coast refineries decreased by 1.0 million b/d (25%) to 2.9 million b/d. Refiner and blender net production of distillate fuel oil averaged 1.9 million b/d, and jet fuel averaged 0.4 million b/d, a decline of 0.8 million b/d (28%), and 0.2 million b/d (34%), respectively, compared with the previous week.
EIA’s WPSR product inventory levels reflect survey responses from only primary inventory facilities, such as refineries and bulk terminal storage hubs, and they include stocks held at or in transit to refineries and bulk terminals as well as stocks in pipelines. The WPSR product inventory excludes secondary or tertiary facilities, such as fueling stations, which may have also faced logistical disruptions because of icy roads and power outages. Gulf Coast motor gasoline, distillate, and jet fuel inventories were within or higher than five-year (2016–2020) historical ranges the week before the onset of cold weather and power outages, according to the WPSR product inventory data. As of February 12, 2021, Gulf Coast total motor gasoline inventories were 90 million barrels (4% higher than the five-year average), total distillate inventories were 56 million barrels (24% higher than the five-year average), and jet fuel inventories were 15 million barrels (3% lower than the five-year average). As of February 19, gasoline inventories increased by 0.8 million barrels (1%) to 90.9 million barrels, distillate inventories declined by 0.4 million barrels (1%) to 55.9 million barrels, and jet fuel inventories declined by 0.6 million barrels (4%) to 14.1 million barrels (Figure 2). The increase in gasoline inventories most likely reflects a reduction in on-road vehicle demand due to the difficult weather conditions, while the decline in other Gulf Coast inventories is likely to impact availability not only in the Gulf Coast region, but also on the East Coast (PADD 1) and in the Midwest (PADD 2). Outages on the Explorer product pipeline, which carries refined petroleum products from Texas up through Indiana, will likely affect gasoline availability in the U.S. Midwest. No disruptions have been reported along the Colonial Pipeline, an important component of the logistical network that connects the U.S. Gulf Coast with East Coast demand markets, although rising prices and reduced availability at the Gulf Coast may carry over to the East Coast as well.
Decreased production and inventory withdrawals combined to put upward pressure on refined petroleum product prices. On February 17, in the midst of the extreme weather, spot market gasoline prices at the U.S. Gulf Coast increased 20 cents per gallon (gal) week on week, or by 13% to $1.79/gal. New York Harbor and Chicago gasoline spot market prices increased 16 cents/gal (10%) and 17 cents/gal (10%), respectively, during the same period. Spot market prices increased above February 17 levels beginning on Monday, February 22, and as of February 23, U.S. Gulf Coast prices had risen an additional 7 cents/gal (4%) from February 17 to $1.86/gal, while the New York Harbor price increased 3 cents/gal (2%) to $1.85/gal and the Chicago price increased 2 cents/gal (1%) to $1.81/gal. The U.S. average retail gasoline prices increased 13 cents/gal (5%) to $2.63 /gal on February 22 compared with a week before, while the average retail gasoline price in the Gulf Coast also increased 13 cents/gal (6%) to $2.34 /gal during the same period.
Crude oil markets have also been disrupted. Flanagan South, a 600,000 b/d pipeline that runs from Illinois to the crude oil storage hub of Cushing, Oklahoma, was shut on February 15, citing power outages. TC Energy’s 750,000 b/d Marketlink pipeline declared force majeure on deliveries to the Texas Gulf Coast, and reports indicate power outages were causing issues with crude oil deliveries. In addition, crude oil production in the Permian region of West Texas, as well as production in Oklahoma, has also been disrupted as a result of power outages and freezing temperatures. Early reports from Bloomberg indicate as much as 4.0 million b/d, or about 35% of U.S. crude oil production, may have been shut in because of icy roads, power outages, and cold-weather complications. Reduced crude oil availability pushed West Texas Intermediate (WTI) spot market prices to a high of $61.14 per barrel on February 17—its highest level since January 2020, before the onset of the COVID-19 pandemic.
EIA will continue to monitor evolving developments in petroleum markets and inventories.
U.S. average regular gasoline and diesel prices increase
The U.S. average regular gasoline retail price increased more than 13 cents to $2.63 per gallon on February 22, 17 cents higher than the same time last year. The Midwest price increased more than 16 cents to $2.56 per gallon, the East Coast price increased more than 13 cents to $2.60 per gallon, the Gulf Coast price increased nearly 13 cents to $2.34 per gallon, the West Coast price increased nearly 11 cents to $3.15 per gallon, and the Rocky Mountain price increased nearly 5 cents $2.44 per gallon.
The U.S. average diesel fuel price increased nearly 10 cents to $2.97 per gallon on February 22, 9 cents higher than a year ago. The West Coast and East Coast prices each increased more than 10 cents to $3.43 per gallon and $3.00 per gallon, respectively, the Gulf Coast price increased nearly 10 cents to $2.72 per gallon, the Midwest price increased more than 9 cents to $2.95 per gallon, and the Rocky Mountain price increased nearly 7 cents to $2.86 per gallon.
Propane/propylene inventories decline
U.S. propane/propylene stocks decreased by 5.2 million barrels last week to 43.5 million barrels as of February 19, 2021, 8.8 million barrels (16.8%) less than the five-year (2016-2020) average inventory levels for this same time of year. Midwest, Gulf Coast, East Coast, and Rocky Mountain/West Coast inventories decreased by 2.0 million barrels, 1.8 million barrels, 1.2 million barrels, and 0.1 million barrels, respectively.
Residential heating fuel prices increase
As of February 22, 2021, residential heating oil prices averaged more than $2.81 per gallon, nearly 7 cents per gallon higher than last week’s price but almost 8 cents per gallon lower than last year’s price at this time. Wholesale heating oil prices averaged nearly $1.96 per gallon, almost 5 cents per gallon above last week’s price and more than 17 cents per gallon above last year’s price.
Residential propane prices averaged more than $2.50 per gallon, nearly 21 cents per gallon higher than last week’s price and almost 53 cents per gallon above last year’s price. Wholesale propane prices averaged more than $1.47 per gallon, nearly 31 cents per gallon above last week’s price and almost 88 cents per gallon above last year’s price.
|Retail prices||Change from last|
|Click to chart this seriesGasoline||2.633||0.132up-arrow||0.167up-arrow|
|Click to chart this seriesDiesel||2.973||0.097up-arrow||0.091up-arrow|
|Click to chart this seriesHeating Oil||2.813||0.069up-arrow||-0.079down-arrow|
|Click to chart this seriesPropane||2.504||0.209up-arrow||0.527up-arrow|
|Futures prices||Change from last|
|Click to chart this seriesCrude oil||59.24||-0.23down-arrow||5.86up-arrow|
|Click to chart this seriesGasoline||1.807||0.114up-arrow||0.156up-arrow|
|Click to chart this seriesHeating oil||1.823||0.052up-arrow||0.136up-arrow|
|*Note: Crude oil price in dollars per barrel.|
|Stocks||Change from last|
|Click to chart this seriesCrude oil||463.0||1.3up-arrow||19.7up-arrow|
|Click to chart this seriesGasoline||257.1||0.0up-arrow||0.7up-arrow|
|Click to chart this seriesDistillate||152.7||-5.0down-arrow||14.2up-arrow|
|Click to chart this seriesPropane||43.491||-5.157down-arrow||-24.641down-arrow|