A new explosion — in Texas, this time — could be sending your gas prices higher
By Chris Isidore, Hanna Ziady, CNN
London/New York (CNN) — An explosion and fire at a major refinery in Texas is sending gas and diesel futures sharply higher in Tuesday trading, adding to the upward pressure on both caused by the war in Iran.
The explosion at the Valero facility in Port Arthur, Texas, occurred Monday and was still burning Tuesday morning. The company did not immediately respond to CNN’s request for comment.
Wholesale gasoline prices were up about 10 cents a gallon in morning trading Tuesday and diesel was up 16 cents a gallon, both due primarily to the incident at the refinery and not those in Iran, said Andy Lipow, president of consulting firm Lipow Oil Associates.
Oil futures were up only narrowly early Tuesday, the day after falling sharply on comments from President Donald Trump that talks with Iran on a possible end to fighting had been productive.
Lipow said that the explosion and fire occurred in a part of the plant that makes diesel fuel, and that portion is likely to be offline for an extended period, putting further upward pressure on diesel prices. But the portion of the plant that makes gasoline could be restarted in the next several weeks, he said.
There is no reason to believe the explosion was anything more than an industrial accident, rather than a deliberate act of terrorism, said Lipow.
“The fact is, fires and explosions do happen in refining and the refining industry,” he said. “It’s just way too early to to know the actual cause.”
Retail gasoline prices are up $1.03, or 35%, in the last month and now average $3.98 per gallon, AAA said Tuesday. That’s the highest price since August 2022. But the average price of a gallon of diesel has soared even more, rising $1.62 a gallon, or 43%, to $5.35 a gallon.
While relatively few American drivers use diesel, it is critical to the trucking and farming industry, so higher prices there could drive up the price of a large swarth of goods that Americans buy.
Most major trucking companies have built-in fuel surcharge schedules that raise the cost that shippers pay to move goods automatically. Almost all goods in an American household were on a truck at some point. Diesel is also the key fuel used in farm equipment that is about to kick into high gear for the spring planting season.
The refinery is one of the 10 largest in the United States, handling 435,000 barrels of oil a day. It has 770 employees. There were no immediate reports of injuries. Neighbors of the plant were advised to “shelter in place” earlier Tuesday due to the thick smoke that closed two highways in the area, about 90 miles from Houston. But that warning from Port Arthur police was lifted later Tuesday morning.
Oil prices up on Iran war concerns
Meanwhile, oil prices rose Tuesday after fresh fighting overnight between Israel and Iran diminished hopes that an end to the Middle East war, now in its fourth week, might be imminent.
Brent crude, the global oil benchmark, climbed almost 1.8% to $101.70 a barrel. WTI, the US benchmark, rose 2.8% to $90.60 a barrel.
Brent had reached more than $114 a barrel Monday on worries about a major escalation after US President Donald Trump threatened to “obliterate” Iranian power plants if Tehran did not reopen the Strait of Hormuz.
The oil price then plunged, settling at $99.94 for the day, after Trump hailed “very good and productive conversations” with Iran about ending the war. He also postponed for five days military strikes against Iranian power plants and other energy infrastructure.
Iran has denied any dialogue with Washington, however, though sources have told CNN that mediation efforts are underway by other countries, including Turkey and Egypt. Pakistan, meanwhile, has offered to host negotiations.
Financial markets took signs that the two sides might be talking as a “huge positive,” because it opened up the possibility of a “much quicker end to the conflict,” Jim Reid, head of global macroeconomic research at Deutsche Bank, wrote in a note Tuesday. “Obviously much now depends on the progress of any talks, and whether the more optimistic rhetoric is followed up by concrete action,” he added.
Despite reports of talks between the two parties, Iran and US ally Israel continued to trade strikes overnight. The Israel Defense Forces sent search and rescue teams to “several sites,” including in Tel Aviv, in the early hours of Tuesday, following a barrage of missiles from Iran. Meanwhile, Israel’s air force struck more than 50 targets in Iran overnight, Israeli authorities said. Israeli strikes against southern Lebanon have also intensified.
Stock markets were mixed Tuesday, as traders weighed hopes for a prompt end to the war against evidence of attacks overnight. Asian markets pared some of Monday’s losses to close higher in Seoul, Tokyo and Hong Kong.
In Europe, markets fell in morning trade, partly reversing the previous day’s gains. US stocks were lower, too: The Dow was down 350 points, or 0.76%, shortly after the opening bell. The S&P 500 fell 0.5%, and the Nasdaq sank 0.6%.
“The peak optimism from yesterday didn’t last long and has not really followed through today,” Neil Wilson, a strategist at investment platform Saxo, said in a note Tuesday.
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CNN’s John Towfighi contributed to this report.
