Former Shell (NYSE:RDS.A) President John Hofmeister said Tropical Storm Harvey poses risks to the U.S. energy supply during an appearance on FOX Business.
Continue Reading Below
Heavy rains and flooding rip-roared through Houston on Sunday, triggering 10 oil refinery plants to shut down including Exxon Mobil’s (NYSE:XOM) Baytown plant, one of the nation’s largest, after rain partially sunk its roof. While the shutdown has caused temporary setbacks for these plants, Hofmeister said improvements made after previous hurricanes could help prevent more damage.
“After [Hurricane] Rita and [Hurricane] Katrina there was a lot of hardening of refineries in that whole region and so people looked and saw what could be done. For example, lifting electricals up off the ground so that they are up high so that water can’t reach them so you don’t short out your system and so you have a lot of resilience. And so I think resilience is the key word,” Hofmeister said to Dagen McDowell on Mornings with Maria Tuesday.
Currently, 15% of the nation’s oil refining capacity has been shut down and could reach 30% as Harvey moves east into Louisiana. Despite advances in damage prevention, Hofmeister said Harvey endangers the nation’s energy supply.
“We will see how the resilience works as they get rid of the water and when they can do that, but yes it is a risk to the nation’s energy supply to have 30% shut down if it comes to that. Louisiana has quite a number of refineries, as does Texas, and once you shut a refinery down you’re looking at a week to 10 days minimum to bring it back up safely,” he said and added that it also creates a personnel problem.
“People are the first level of concern at any refinery and they have to take care of their families and their home and so their availability becomes quite a problem for operating a refinery.”
Meanwhile, gasoline prices climbed to a two-year high Monday but Hofmeister pointed out the spike won’t last “very long.”