Har­vey is push­ing gaso­line prices higher

Miami Herald - - FRONT PAGE -

re­fin­ers — known in the in­dus­try as “the crack spread” — that has widened in the af­ter­math of Har­vey.

“If you are a re­finer, you are pretty happy,” DeHaan said. “Re­fin­ers not af­fected by Har­vey are prob­a­bly turn­ing out sup­plies as best they can. They are see­ing the high­est crack spreads of the year.”

Be­fore Har­vey hit, gaso­line prices had been head­ing lower as they do to­ward the end of ev­ery sum­mer, thanks largely to an over abun­dance of gaso­line stock­piled for sum­mer driv­ers.

That over­hang usu­ally gets burned off in early fall, bar­ring a wild­card like a hur­ri­cane.

“We were cruis­ing into fall with gas prices de­clin­ing, and the only rea­son that is in­ter­rupted is geopo­lit­i­cal ten­sions and hur­ri­cane sea­son,” DeHaan said. “It’s al­ways a caveat. The eight­ball can’t pre­dict geopol­i­tics and hur­ri­canes.”

The gaso­line short­age ar­rives even though U.S. crude oil pro­duc­tion re­mains near his­toric highs at more than 9 mil­lion bar­rels of oil a day. That has con­trib­uted to a world­wide glut that has tamped down crude prices — and the prof­its at big oil pro­duc­ers. Lower prof­its have trans­lated into. lower stock prices for oil su­per­ma­jors such as Chevron, Exxon and BP.

Crude oil prices were down slightly Tuesday, hov­er­ing around $46 per bar­rel. The price threat­ened to go be­low $40 ear­lier this sum­mer. That’s com­pared to more than $100 per bar­rel just three years ago.

Some of that oil, tem­po­rar­ily at least, has nowhere to go be­cause of the re­fin­ery shut­downs. It may be shipped overseas for re­fin­ing.

“While U.S. re­fin­ing ca­pa­bil­i­ties are cur­rently di­min­ished, overseas re­fin­ers can pick up some of the slack,” said Pavel Molchanov, an en­ergy an­a­lyst at the in­vest­ment firm Ray­mond James. “This is what hap­pened af­ter Ka­t­rina in 2005.”

Molchanov said the crude oil prices will be un­af­fected by the hur­ri­cane over the long run.

“The fear is that oil de­mand will be weak­ened,” Mochanov said. “But this is a mis­con­cep­tion. Weath­er­re­lated dis­rup­tions such as these are im­ma­te­rial over the long run for oil market fun­da­men­tals.”

DeHaan said gaso­line prices at the pump will even­tu­ally re­cede, but not be­fore the flood wa­ters tell the full story.

“Once we see how much dam­age there is when the wa­ter re­cedes,” DeHaan said, “that will be di­rectly pro­por­tion­ate to how long prices stay el­e­vated.”

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.