US fuel shortages from Harvey to hamper Labor Day travel

NEW YORK, Sept 1 (Reuters) - Travelers and fuel suppliers across the United States braced for higher prices and shortages ahead of the Labor Day holiday weekend as the country's biggest fuel pipelines and refineries curb operations after Hurricane Harvey.

Just six days after Harvey slammed into the heart of the U.S. energy industry in Texas, the effects are being felt not just in Houston, but also in Chicago and New York, and prices at the pump nationwide have hit a high for the year.

Supply shortages have developed even though there are nearly a quarter of a billion barrels of gasoline stockpiled in the United States. But much of it is held in places where it cannot be accessed due to massive floods, or too far away from the places it is needed. Some of it is unfinished, meaning it needs to be blended before it can go to gas stations.

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Animals being rescued during Hurricane Harvey
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Animals being rescued during Hurricane Harvey
A man carries a dog after being rescued from rising floodwaters due to Hurricane Harvey in Spring, Texas, U.S., on Monday, Aug. 28, 2017. A deluge of rain and rising floodwaters left�Houston�immersed and helpless,�crippling a global center of the oil industry and testing the economic resiliency of a state thats home to almost 1 in 12 U.S. workers. Photographer: Luke Sharrett/Bloomberg via Getty Images
A boy hugs his grandmothers' dog after being rescued from rising floodwaters due to Hurricane Harvey in Spring, Texas, U.S., on Monday, Aug. 28, 2017. A deluge of rain and rising floodwaters left�Houston�immersed and helpless,�crippling a global center of the oil industry and testing the economic resiliency of a state thats home to almost 1 in 12 U.S. workers. Photographer: Luke Sharrett/Bloomberg via Getty Images
HOUSTON, TX - AUGUST 27: Volunteers and officers from the neiborhood security patrol help to rescue residents and their dogs in the upscale River Oaks neighborhood after it was inundated with flooding from Hurricane Harvey on August 27, 2017 in Houston, Texas. Harvey, which made landfall north of Corpus Christi late Friday evening, is expected to dump upwards to 40 inches of rain in Texas over the next couple of days. (Photo by Scott Olson/Getty Images)
HOUSTON, TX - AUGUST 27 2017: Elma Moreno comforts her dog, Simon as they are loaded on to a trucks after being evacuated from their flooded apartment. Tropical Storm Harvey is causing major flooding throughout Houston and Southeast Texas. (Photo by Robert Gauthier/Los Angeles Times via Getty Images)
A man carries a dog after being rescued from rising floodwaters due to Hurricane Harvey at the Highland Glen housing development in Spring, Texas, U.S., on Monday, Aug. 28, 2017. A deluge of rain and rising floodwaters left�Houston�immersed and helpless,�crippling a global center of the oil industry and testing the economic resiliency of a state thats home to almost 1 in 12 U.S. workers. Photographer: Luke Sharrett/Bloomberg via Getty Images
Bentley, a 10 year old maltese, takes refuge with his owner in a school after they lost their home to Hurricane Harvey in Rockport, Texas, U.S. August 26, 2017. REUTERS/Adrees Latif
Pets are evacuated from flood waters from Hurricane Harvey in Dickinson, Texas August 27, 2017. REUTERS/Rick Wilking
People and their pets are rescued from flood waters from Hurricane Harvey on a boat in Dickinson, Texas August 27, 2017. REUTERS/Rick Wilking
Kenneth and Minnie Bice prepare to sleep outside the M.O. Campbell Red Cross shelter in Aldine, Texas, United States August 28, 2017. Pets are not allowed inside and so the two are sleeping on the portico with their two dogs and a cat. REUTERS/Peter Henderson
HOUSTON, TX - AUGUST 27: Residents carry their pets and belongings along Mercury Drive as they flee flood water at their homes in Houston, TX on Sunday, Aug 27, 2017. Rising water from Hurricane Harvey pushed thousands of people to rooftops or higher ground Sunday in Houston. (Photo by Jabin Botsford/The Washington Post via Getty Images)
Flood victims move crates with pets at a shelter in the George R. Brown Convention Center during the aftermath of Hurricane Harvey on August 28, 2017 in Houston, Texas. Rescue teams in boats, trucks and helicopters scrambled Monday to reach hundreds of Texans marooned on flooded streets in and around the city of Houston before monster storm Harvey returns. / AFP PHOTO / Brendan Smialowski (Photo credit should read BRENDAN SMIALOWSKI/AFP/Getty Images)
People check in with their pets to a shelter in the George R. Brown Convention Center during the aftermath of Hurricane Harvey on August 28, 2017 in Houston, Texas. Rescue teams in boats, trucks and helicopters scrambled Monday to reach hundreds of Texans marooned on flooded streets in and around the city of Houston before monster storm Harvey returns. / AFP PHOTO / Brendan Smialowski (Photo credit should read BRENDAN SMIALOWSKI/AFP/Getty Images)
Evacuation residence from the Meyerland area are loaded onto a truck on an I-610 overpass during the aftermath of Hurricane Harvey August 27, 2017 in Houston, Texas. Hurricane Harvey left a trail of devastation Saturday after the most powerful storm to hit the US mainland in over a decade slammed into Texas, destroying homes, severing power supplies and forcing tens of thousands of residents to flee. / AFP PHOTO / Brendan Smialowski (Photo credit should read BRENDAN SMIALOWSKI/AFP/Getty Images)
Evacuation residents from the Meyerland wait on an I-610 overpass for further help during the aftermath of Hurricane Harvey August 27, 2017 in Houston, Texas. Hurricane Harvey left a trail of devastation Saturday after the most powerful storm to hit the US mainland in over a decade slammed into Texas, destroying homes, severing power supplies and forcing tens of thousands of residents to flee. / AFP PHOTO / Brendan Smialowski (Photo credit should read BRENDAN SMIALOWSKI/AFP/Getty Images)
HOUSTON, TX - AUGUST 28: People make their way out of a flooded neighborhood after it was inundated with rain water, remnants of Hurricane Harvey, on August 28, 2017 in Houston, Texas. Harvey, which made landfall north of Corpus Christi late Friday evening, is expected to dump upwards to 40 inches of rain in areas of Texas over the next couple of days. (Photo by Scott Olson/Getty Images)
HOUSTON, TX - AUGUST 28: Evacuees make their way to dry land after leaving their homes that were inundated with flooding from Hurricane Harvey on August 28, 2017 in Houston, Texas. Harvey, which made landfall north of Corpus Christi late Friday evening, is expected to dump upwards to 40 inches of rain in Texas over the next couple of days. (Photo by Joe Raedle/Getty Images)
A vet holds a dog at a shelter in the George R. Brown Convention Center during the aftermath of Hurricane Harvey on August 28, 2017 in Houston, Texas. Rescue teams in boats, trucks and helicopters scrambled Monday to reach hundreds of Texans marooned on flooded streets in and around the city of Houston before monster storm Harvey returns. / AFP PHOTO / Brendan Smialowski (Photo credit should read BRENDAN SMIALOWSKI/AFP/Getty Images)
HOUSTON, TX - AUGUST 28: People evacuate their homes after the area was inundated with flooding from Hurricane Harvey on August 28, 2017 in Houston, Texas. Harvey, which made landfall north of Corpus Christi late Friday evening, is expected to dump upwards to 40 inches of rain in Texas over the next couple of days. (Photo by Joe Raedle/Getty Images)
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Harvey has highlighted another weakness in the system: pipeline terminals typically only have a five-day supply in storage to load into the lines.

Some of the biggest pipelines in the United States, supplying the northeast market and the Chicago area, have already shut down or reduced operations because they have no fuel to pump.

"Gasoline is very much a 'just-in-time' fuel, for as many million barrels as they think we have," said Patrick DeHaan, petroleum analyst at GasBuddy. "Sure, they are somewhere, but they still have to be mixed and blended together."

At least two East Coast refiners, including Philadelphia Energy Solutions and Irving Oil, have already run out of gasoline for immediate delivery as they have rushed to send supplies to the U.S. Southeast, Caribbean, Mexico and South America to offset the lack of exports since Harvey, sources said.

Wholesale gasoline and jet fuel prices have soared as at least 4.4 million barrels per day of refining capacity, or nearly 24 percent of total U.S. capacity, has been closed due to the record rains.

"Since Friday, my cost has gone up 30 cents per gallon," said Ben Little, owner of independent station Ben Little Pure, in the middle of Nashville.

The U.S. Environmental Protection Agency issued fuel waivers in 38 states and Washington, D.C. to ease concerns of supply shortages.

The Energy Department released 500,000 barrels of crude from the Strategic Petroleum Reserve on Thursday. But the market is not short of crude, which makes up the majority of the country's strategic stockpiles.

The United States is short of fuel. The country only has a 1-million barrel gasoline reserve, established in the Northeast after Superstorm Sandy in 2012. That is enough to supply the East Coast for about eight hours.

Gasoline production hit a record in this past week of 9.85 million barrels a day, ahead of the storm, due to the expected spike in driving demand, according to U.S. Energy Department data, a phenomenon seen in the last several years.

TERMINAL SUPPLIES RUN LOW QUICKLY

Colonial Pipeline, the biggest U.S. fuel system, said deliveries to the U.S. Northeast from east of Lake Charles, Louisiana would be hit by supply constraints and as its Houston and Port Arthur origination points have been shut by the storm.

One terminal operator in the New York Harbor region which receives distillate fuel supplies from Colonial said it expects disruptions to its next batch of supplies set to arrive on Sept. 6.

Jet fuel supplies are also threatened. Colonial also services major airports, including Atlanta's Hartsfield Airport, the busiest U.S. terminal, and Washington's Dulles. U.S. airlines had been projected to carry 16.1 million passengers worldwide this weekend, up 5 percent from last year.

Motiva Enterprises LLC's Port Arthur refinery, the country's largest, with the ability to produce 600,000 barrels of products a day, will be shut for at least two weeks, according to sources familiar with plant operations.

Others may remain shut longer, so motorists nationwide may not have seen the full impact of Harvey yet. The average national price for regular-grade gasoline is up 10 cents in the last week to $2.449 a gallon, but some states have seen increases of as much as 19 cents, according to motorist group AAA.

Prices are likely to top $2.50 a gallon in coming weeks, which would be the highest since August 2015, the AAA said.

Kim Black, 48, waited in line for 45 minutes to fill her white SUV in Garland, a suburb of Dallas, the fifth station she had tried Thursday. A clerk suddenly waived his arms at the line, yelling, "No more gas!"

She was only able to pump less than two gallons, clicking the handle twice to be sure. "$7.00. Well, that's it," she said.

(Additional reporting by Alana Wise and Libby George in New York, Timothy Gardner in Washington, Timothy Ghianni in Nashville, Tennessee and Lisa Maria Garza in Dallas; Editing by David Gaffen, Simon Webb and Lisa Shumaker)

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