Expect gas prices to jump due to Harvey

CALGARY — Canadian gasoline prices are expected to rise this week after widespread flooding from tropical storm Harvey forced many refineries on the Texas Gulf Coast to shut down.

Wholesale gasoline prices in the country will likely rise by an average of two to four cents per litre by Thursday, said GasBuddy senior petroleum analyst Dan McTeague, but consumers in certain markets could see much higher price increases.

McTeague explained that retail operators in markets like Calgary, Montreal and Ottawa are barely breaking even now and could use the wholesale price increase as an excuse to raise prices by as much as another 10 cents per litre to boost profit margins.

“Traders are taking a wait-andsee approach, and I think that’s really why you’re going to see very little, for now at least, in the way of any major spikes until at least Thursday or Friday,” he said.

U.S. gasoline future prices spiked Monday morning, but Canadian prices shown on the GasBuddy.com website were little changed.

BMO Capital Markets economist Sal Guatieri said gasoline futures prices rose to more than twoyear highs overnight after the storm knocked out about a tenth of U.S. refinery capacity.

“The damage could worsen if continued rains extend the flooding,” he warned in a report, pointing out that U.S. spot oil prices were down due to the reduction in gasoline refinery demand.

Meanwhile, Canadian companies with assets in the Gulf Coast area joined their American counterparts in closing offices and hunkering down to wait out the storm.

Precision Drilling CEO Kevin Neveu, who splits his time between Alberta and Texas, said his house in the Houston suburbs is dry so far, but flooding has damaged the homes of at least five of his company’s 300 Houston-area employees.

He said Precision’s main Houston offices and three field support operations are closed, but 10 drilling rigs in the “rain zone” along the Gulf Coast are continuing to operate.

Calgary-based pipeline company Enbridge, which bought Houston-headquartered Spectra Energy this year, says it has closed its Houston offices and has removed all but essential staff from its natural gas gathering and processing facilities in the Gulf of Mexico.

S&P Global Platts estimates that Harvey has affected about 2.2 million barrels per day of refining capacity in the United States, including ExxonMobil, Shell and Phillips 66 operations that began shutting down Sunday.