Texas refinery Shutdown and its impact on Canadian gas prices

BY TVISHA MISTRY

US President Joe Biden has issued an emergency declaration, providing federal assistance in the state of Texas.

Texas; the Lone Star State, the land of cowboys, and home to the country’s finest Country music and rodeos, recently experienced unanticipated harsh winter weather.

Making a majority of its economy through oil, Texas is the leading crude oil and natural gas-producing state in the country. Texas produces roughly 4.6 million BPD (barrels per day) of oil and houses some of the nation’s top gasoline and diesel producing refineries.

As a result of the weather, Texas faced an electric blackout, leaving nearly 3 million homes and businesses without electricity, and water across the state. Along with several other essential businesses the largest oil refineries and mines in North America have also been forced to halt.

Producing more than 3 million barrels of crude oil every day, Energy Aspects Ltd. has been idled as a result of the record-setting freeze, according to a consultant at Energy Aspects Ltd.

The 585,000 BPD (barrels per day) crude oil pipeline owned by Enbridge Inc. that runs from its terminal near Pontiac, Illinois, outside of Chicago, to the largest U.S. oil storage hub in Cushing, Oklahoma, was also stopped due to the unexpected climate change.

“Crews are working with electric utility providers to restore power to Line 59,” as the pipeline is called,” said Enbridge spokesman Michael Barnes. “We are carefully monitoring weather conditions and will resume normal operations as soon as it is safe to do so.”

Oil refiner Motiva Enterprises has also announced the closure of its 607,000 barrels per day refinery in Port Arthur, Texas. Valero Energy Corp and Total SE have also opted to shut their 335,000 and 225,000 BPD plants in Port Arthur, after the failure of the crude distillation unit and the hydrotreater, consequent to the unanticipated drop in temperature.

With mounting concerns that the storm can curb fuel production, the shutdown of refineries has exceeded the oil prices higher in the past weeks in the United States. With the temperature predicted to drop further, it is expected that oil prices will only rise in 2021.

The impact of refinery shutdowns and increased gas prices will not be limited to the United States and will likely affect all the countries that rely on the U.S. Gulf Coast for fuels; including Canada.

While most of Canada’s crude oil production is done within the nation in the provinces of Alberta, Saskatchewan, and Newfoundland and Labrador; Ontario exports a large portion of the mined oil to process in refineries that are based in the States. Specifically, the mined oil is sent for further processing in North Dakota and Texas from Canada.

When the crude oil wells and refineries reopen, the fuel price will likely rise drastically. Canadians can expect to pay a much higher rate at gas stations when refilling fuel. After the coronavirus dragged down the oil market in 2020, the elevated prices should restrengthen the recovery of the oiling industry and its economy.

Oftentimes I have heard people dismiss global warming as an issue for the future, precisely “a problem for after they die”. However everyday changes, much like the snowfall in Texas reminds us that this problem is not for tomorrow but is being faced as of this moment. It is an issue for today.

We are no longer making better decisions for future generations. We are no longer securing a healthy and safe environment for them. But rather we are making choices that directly impact us. Not ten years from now, but today.

It is time that we introspect on our choices. That we choose better. If not for the future generation, then for ourselves. This is the biggest crisis humanity faces, and the fate of the world is in our hands.