Hurricane Harvey is battering Texas much worse than it did Mexico, but that doesn’t mean the nation to the south won’t be bruised.
Harvey could bring higher fuel costs and shortages ahead for the No. 1 buyer of U.S. gasoline.
While the storm passed relatively harmlessly over the Yucatán Peninsula, it strengthened to a Category 4 hurricane before making landfall in Texas.
It ended up near the U.S. Gulf Coast’s refinery hub that helps feed Mexico’s transportation system. In July, Pemex imported 72 percent of the gas it sold; its six refineries operated at the lowest volume since December 1990.
If damage in the U.S. “is as extensive as it could be, then we are looking at a pretty serious crunch on Mexico’s fuel supply,” said Javier Alonso, an analyst at Americas Market Intelligence, speaking to Bloomberg News. “Expect fuel prices to go up regardless of where they get their supply from.”
Harvey is whipping up a region where 5 million barrels of oil a day are produced. About 22 percent of Gulf oil production had also been shuttered, along with the port of Corpus Christi, which ships the largest amount of U.S. crude overseas.
Heavy rainfall could erase more than two million barrels from Texas’ supply chain, according to Citigroup.