There are six large oil refineries in the path of Hurricane Sandy, and as of last night two were closed. The Phillips 66 (NYSE: PSX) refinery and the Hess Corp. (NYSE: HES) refinery in New Jersey were shut down, taking 285,000 and 70,000 barrels a day, respectively, out of production.
Of the remaining four, the largest, belonging to Philadelphia Energy Services, was running at a minimum level, not its 330,000 barrel a day maximum. Two refineries owned by PBF Energy Co. also were running at reduced levels. The status of the sixth, now owned by Delta Air Lines Co. (NYSE: DAL), is unknown, as Delta has declined to indicate whether it is operating or at what level.
The largest portion of the gasoline supply to the U.S. Northeast comes from the Gulf Coast by way of the Colonial Pipeline, which has a capacity of 2.3 million barrels a day. So far as we know, the pipeline is undamaged.
Crude oil prices are only a little higher this morning, while reformulated gasoline prices have dropped a little. Unless there is some major problem with restarting the shut down or slowed down refineries, production should return to normal relatively quickly. Pump prices may spike temporarily, but the spikes are very likely to be short-lived. Unlike Hurricane Katrina in 2005, crude production is not affected and damage to the refineries at this point is not believed to be extensive.