DALLAS (Reuters Breakingviews) - Tropical Storm Harvey is exposing flaws in Donald Trump’s energy policies. The president wants to make America a dominant fuel exporter by promoting coal and opening up federal lands for oil drilling. But the deluge in Texas has disrupted 16 percent of the nation’s refining capacity, according to Goldman Sachs research. Tackling climate change and hardening energy infrastructure should take priority over Trump’s pet projects.
In June, the president set out a goal of boosting domestic production and ending U.S. dependence on foreign oil. He campaigned on a promise of reviving the coal industry, and in April he signed an executive order to expand drilling off America’s coasts. In May he proposed selling nearly half the U.S. Strategic Petroleum Reserve, a stockpile set up in the wake of the 1973-74 Arab oil embargo.
Yet oil and gas are plentiful today thanks in large part to the U.S. revolution in hydraulic fracturing. Those supplies do little good, though, if the infrastructure that turns them into fuel isn’t working.
Texas has the nation’s largest concentration of refineries, and although early reports suggest most facility closings were preventative, it’s too early to assess any damage. The National Weather Service projects the storm will linger over the Texas and Louisiana coasts through Friday, dropping as much as 50 inches of rain in places. Research from Tudor Pickering Holt estimates up to 30 percent of the nation’s refinery capacity could be temporarily shuttered in a worst-case scenario.
Refining capabilities elsewhere could take up the slack if transportation wasn’t an issue. But roads are flooded and pipeline capacity in the region was just building up to meet demand. Crude may be stuck in Texas for a couple of weeks, which explains why West Texas Intermediate prices dropped on Monday while gasoline prices spiked 7 percent in early trading before paring gains. Investors are betting that problems will show up at the gas pump, not at the oil well.
As a result of climate change, rainfall in Texas is increasing and storms are becoming more intense while the sea level is rising by almost two inches a decade along the state’s Gulf coast, according to the Environmental Protection Agency. Addressing that threat, and the vulnerability of Texas’s refining and transportation infrastructure, would be a better way to ensure the nation’s energy security.
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