Gulf Coast Gasoline Gains as Mississippi Barge Traffic Slows

Gulf Coast and Midwest spot gasoline gained as a slowdown in barge traffic because of high water levels on the Mississippi and Ohio Rivers threatened to disrupt oil and petroleum-product shipments.

Operations may also be disrupted at refineries owned by Valero Energy Corp. and Exxon Mobil Corp. (XOM) that are located on the Mississippi. Heavy rain has swelled river levels to their highest ever along parts of the Ohio and Mississippi, according to government data.

The discount for conventional, 87-octane gasoline in the Gulf Coast narrowed 1.05 cents to 5.2 cents a gallon versus futures traded on the New York Mercantile Exchange at 2:14 p.m., according to data compiled by Bloomberg. It was the strongest differential for this time of year since 2007. Prompt delivery slipped 0.22 cent to $3.2647 a gallon.

“Several thousand barges have probably been slowed,” Craig E. Philip, chief executive officer of Ingram Barge Co., said in a telephone interview. “The area that is the most impacted is the center of the network between Memphis and St. Louis on the Mississippi and the lower part of the Ohio River.”

The same fuel in the Midwest, or Group 3, rose 0.13 cent versus futures to a discount of 2.75 cents a gallon.

Refineries in the Midwest, including Valero’s Memphis plant, and those nearer the mouth of the Mississippi, were making contingency plans in the event of flooding.

“Both Exxon Mobil Baton Rouge and Chalmette Refining LLC are closely monitoring the situation,” Kevin Allexon, a company spokesman based in Fairfax, Virginia, said in an e-mail. The refineries, located in Louisiana, “are taking precautions against potential impacts of the forecasted high water conditions,” he said.

Valero is watching water levels, but expects the Memphis refinery to remain in operation, Bill Day, a company spokesman, said in an e-mail yesterday.

To contact the reporter on this story: Paul Burkhardt in New York at pburkhardt@bloomberg.net.

To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net.

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