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How Exxon shut down refineries during Hurricane Harvey and still made a profit

Irving-based Exxon, the biggest U.S. oil company, beat analyst expectations to earn nearly $4 billion in net income during the July-September quarter, up 50 percent from last year.

Rising crude oil prices helped energy giants Exxon Mobil and Chevron beat Hurricane Harvey blues and report a 50 percent jump in profits during the July-September quarter.

Irving-based Exxon, which temporarily shut down refineries and chemical plants along the Gulf Coast during the hurricane, beat Wall Street analyst expectations to report $3.97 billion in third-quarter profits, up from $2.65 billion during the same period last year.

That more than covered the $160 million in damage and losses caused by Harvey. Darren Woods, Exxon's chairman and CEO, said the quarter's results represented "a step forward in our plan to grow profitably."

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Exxon's performance closely tracked that of Chevron, which reported profits of $2 billion during the quarter.

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Responding to the 2014 oil price crash, oil companies resorted to cost-cutting measures that included layoffs and project cancellations. Gains from those lower operating costs also helped the two biggest U.S. producers boost profit by 50 percent or more in the third quarter. And, large refiners were expected to benefit from rising crude oil prices and a post-storm surge in gasoline prices, a Bloomberg survey of analysts concluded.

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The crack spread, a rough measure of how profitable it is to process crude into fuels, jumped to $27.35 a barrel on Sept. 1, compared with $18.64 the day before Harvey's landfall. On Friday, the price of Brent crude, the global benchmark, climbed above $60 a barrel for the first time in more than two years.

Harvey impact, just a blip

On Thursday, San Antonio-based Valero reported that profits were up more than one-third in the quarter despite Harvey. Its third-quarter refining volume of 2.9 million barrels per day was up 33,000 barrels compared with a year earlier. In response to the hurricane, Valero shut down its Corpus Christi and Three Rivers refineries and reduced production at three plants near Houston and Port Arthur.

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At Phillips 66, which also had some shutdowns, profits were up by about half.  The Chevron Phillips Baytown petrochemical complex — which Chevron co-owns with Phillips 66 — temporarily closed because of Harvey-related flooding.

Harvey crashed onto the Texas coast near Corpus Christi on Aug. 25. The Category 4 storm moved slowly along the coast and dumped more than 50 inches of rain in some areas. The death toll attributed to Harvey has been estimated at 93, according to state officials.

The storm struck the nation's most important oil and gas region. Nearly one-third of U.S. refining capacity is located along the Texas Gulf Coast. It's a major hub for chemical manufacturing, and that part of Texas is also a significant natural gas producer.

Harvey and the flooding that followed shut down oil drilling on land and in the Gulf of Mexico, halted gas drilling operations,  closed pipelines and shuttered oil refineries and chemical plants. At its peak, about one-quarter of the U.S. refining capacity was shut down.

For the week ending Sept. 1, Gulf Coast refinery output dropped by 34 percent from the previous week, according to the U.S. Energy Information Agency. The closures created gasoline shortages and lines throughout Texas (Dallas-Fort Worth appeared to be hit hardest).

The EIA reported this week that Gulf Coast refinery capacity now approached its pre-Harvey level.

The Associated Press and Bloomberg contributed to this report.