Fuel Prices Soar, Large U.S. Refineries Shut, as Storm Outages Surpass 1.5 Million

Many of the largest refineries in the U.S. shut on Friday, while extreme snow and cold blanketed much of the country, and power and heating prices soared. The cold is responsible for freezing gas and oil wells and knocking power out to more than 1.5 million businesses and homes.

The deep freeze is blanketing most of the U.S., and when combined with a substantial winter storm in the Midwest, two-thirds of the country is under extreme weather alerts.

Over 1 million barrels of daily refining capacity in the Gulf of the U.S. is shut down because of freezing temperatures. That number includes Motiva Port Arthurs, which can process more than 600,000 barrels per day. It is the largest refinery in the country.

By early afternoon, more than 1.5 million businesses and homes in the United States lost power, mainly in the Midwest and Southeast. North Carolina said it had more than 187,000 without power.

“Crews are restoring power, but high winds are making repairs challenging at most of the 4,600 outage locations,” said Jeff Brooks, Duke Energy spokesman on Twitter Friday.

Natural gas, heating oil futures rise dramatically

Natural gas and heating oil futures rose dramatically in response to the cold. Natural gas futures rose 3.5%, while heating oil futures gained 4.6%.

In New England, gas Friday at the Algonquin hub rose 361% to an almost 11-month high, at $30 per each million British thermal units (mmBtu).

Around half of the power generated in the New England region comes from gas-fired plants. However, on the coldest days, power generators shift and burn more oil. According to New England ISO, a grid operator, power companies’ generation mix was 17% from oil-fired plants as of midday Friday. ISO New England said their system was “looking OK” going into the weekend and didn’t anticipate any transmission system problems.

In West Texas, the Waha Hub next-day gas jumped 22% to nearly $9 mmBtu, the highest since the freeze. Gas in New York soared 346% to $28 per mmBtu, the highest since it hit the record of $140 in January of 2018.

Gas output fell about 6.5 billion cubic feet per day (bcfd) over the past four days, a nine-month low of 92.4 bcfd on Friday as wells froze in North Dakota, Pennsylvania, Texas, Oklahoma, and elsewhere. The most substantial drop in gas output since the freeze in February 2021 knocked out power for millions of Texans.

One billion cubic feet supply enough gas for about five million homes in the U.S. daily.