Modest gas price increases will follow storm

Gulf Coast refineries are still vulnerable, analysts warn

Hurricane Harvey is likely to lead to modest gasoline price increases across the USA, a top oil analyst says, and further increases are possible if catastrophic rain and flooding in the Houston area inflict additional damage on refineries.

“There were fears this could be a Katrina-like event,” says Tom Kloza, global head of energy analysis for the Oil Price Information Service. “This is not a Katrina-like event.”

Refineries in the Houston and Corpus Christi areas shut down before the storm hit Friday to minimize damage. Kloza expects Corpus Christi refineries to reopen within two to three days. Less certain are the effects on the Houston area, where 30 to 40 inches of rain is expected.

“We just don’t have a history for that,” he says.

Although Houston-area refineries appear to have withstood the brunt of the hurricane’s damage, Kloza says, much will depend on the effect of further downpours and how quickly power is restored.

Nationally, regular unleaded gasoline averaged $2.36 a gallon Sunday, up from $2.35 Saturday and $2.33 a week ago.

Kloza says fallout from the hurricane could push prices up an additional 5 to 15 cents next week as a surge in Labor Day holiday demand collides with the pullback in supply.

Pump prices that normally would fall 25 cents after Labor Day instead will probably stay elevated through September before dropping, he predicts.

About one-third of the nation’s refining capacity is in the Gulf Coast region.

The Environmental Protection Agency waived requirements for refineries to make cleaner, summer-blend gasoline because of the storm, which helped limit price increases, Kloza says.

Darrin Newsom, senior analyst with DTN, expects lingering damage to refineries to push prices up more sharply, by 15 cents to 20 cents a gallon or more.