GAS PRICES jump overnight.
DALLAS — The spike in gasoline prices in the aftermath of Hurricane Harvey has hit the accelerator.
The national average price for a gallon of gas was $2.56 by Friday afternoon, an increase of 20 cents in the past week, according to GasBuddy.
Prices jumped at least 10 cents a gallon in 24 hours in Texas, Ohio, Georgia and the Mid-Atlantic states, travel club AAA reported Friday. In Arkansas, the average price Friday was $2.28, up from $2.10 a week ago.
The nationwide average was already higher than most experts had predicted as a worst-case scenario when flooding from the devastating storm began knocking out refineries along the Texas Gulf Coast a week ago.
Two of the leading price forecasting analysts, GasBuddy’s Patrick DeHaan and Tom Kloza of the Oil Price Information Service, now see the national average peaking as high as $2.75 a gallon in the next few days.
On a positive note for consumers, wholesale motor fuel prices fell Friday as traders assessed the supply implications of refinery restarts. Gasoline futures tumbled 1.8 percent in New York as Gulf Coast refiners, including Valero Energy Corp. and Citgo Petroleum Corp., fired up idled equipment. The Environmental Protection Agency eased anti-pollution rules for 38 states and Washington, D.C., to allow more varieties of gasoline to flow between markets.
Meanwhile, the U.S. has approved the release of 4.5 million barrels from the Strategic Petroleum Reserve in response to Harvey, more than tripling the amount announced Thursday.
The Energy Department will deliver 3 million barrels to Marathon Petroleum Corp. and 500,000 barrels to Valero Energy Corp. from its Bayou
Choctaw site about 12 miles southwest of Baton Rouge. That comes on top of 1 million barrels previously approved for a Phillips 66 refinery.
“Without trying to affect the market place, we are trying to be as stable as we can, making sure folks can, in fact, have access to gasoline,” Energy Secretary Rick Perry said on Bloomberg Television. Perry said he sees about a “two-week bump” in gasoline prices from the storm, which made landfall in Texas on Aug. 25.
“The government is actually reacting positively, trying to address and do what they can,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund, said by telephone. “There are some signs of life in several of the refineries already and the 1 million-barrel tapping of the [strategic reserve] is also helping to ease anxieties over the storm.”
Oil traders are rushing to book tankers to haul European gasoline across the Atlantic Ocean.
Traders booked 20 tankers to load European fuels to the U.S. since Harvey made landfall, according to charter lists compiled by Bloomberg. The rate of bookings is about double the average for August. Shipbrokers said flows to New York will be the highest since November, when a pipeline blast curbed inflows from the Gulf of Mexico.
“It will take several weeks before the whole refining capacity is restored,” said Ehsan Ul-Haq, a London-based director of crude oil and refined products at Resource Economist Ltd. “As a result, increased gasoline flows from Europe to the U.S. will continue at least for three to four weeks.”
Some gas stations in the Dallas area were dry Friday, and those that had gasoline were often charging more than $3 a gallon — and drawing long lines of desperate drivers.
The analysts said interruptions in supply were isolated and lines were largely the result of people rushing out to top off their tanks. DeHaan said only one wholesale gasoline terminal out of the six in the Dallas area was dry.
“There is enough gas out there,” he said. “It’s just a matter of getting it to the right places before motorists panic.”
Long lines could pop up next in the Southeastern and Eastern states, as far north as New York, which get much of their gasoline from the Colonial pipeline that taps into
refineries in Texas and Louisiana. The operator expects the pipeline will resume normal operations on Sunday. On top of that, analysts said some gasoline from the Northeast is being diverted to Florida, and gasoline exports are contributing to the higher prices.
Dolin Argo, vice president of operations and business development for Tulsa-based Explorer pipeline, said Friday that the company closed its two main pipelines on Wednesday. Argo said deliveries should resume this weekend if refined fuel products are available from Texas refineries.
The U.S. now exports large amounts of gasoline, especially to Mexico and other parts of Latin America, and buyers there are competing with domestic distributors and bidding up prices.
How long the high prices will last depends on how quickly the Gulf Coast refineries are back in business, especially the giants like Motiva’s Port Arthur, Texas, plant and the Exxon Mobil refinery in Baytown, near Houston.
“There’s going to be a lot of noise around Hurricane Harvey over the next few weeks, given the fact that it was obviously very disruptive,” Joseph Bozoyan, a portfolio manager at Manulife Asset Management LLC in Boston, said by telephone. But “it sounds like things are getting back on track in terms of refineries coming back online and also some of the pipelines as well.”
One Chevron station in downtown Dallas was selling gasoline for $2.29 a gallon before Harvey bumped up its price to $2.99 on Thursday, and a nearby Shell station was asking $3.97.
QuikTrip, one of the nation’s largest convenience store chains, temporarily halted gasoline sales at about half its 135 stores in the Dallas-Fort Worth area and redirected fuel deliveries to a few designated stores across the area, said company spokesman Mike Thornbrugh.
“Supply is way, way off,” Thornbrugh said Thursday.