In Business

Storm will hit Gulf Coast, refineries

Harvey’s impact: Hurricane threatens refineries; gas prices likely to rise.

Hurricane Harvey, the monster storm colliding with the Texas Gulf Coast, promises to send gasoline prices higher.

A refinery-rich stretch of the Gulf Coast, and one of the largest petrochemical complexes in the world, could be impacted by the storm, but “we really won’t know with any certainty for the next 24 to 48 hours,” said Jim Ritterbusch, president of Ritterbusch & Assoc., an oil trading and advisory firm in northern Illinois.

Ritterbusch and others say pump prices are likely to spike if the storm puts a number of refineries out of commission, but the market seems to be taking a wait-and-see attitude about it. Spot futures prices for gasoline barely budged on Friday after jumping 3% on Thursday.

Still, some refineries are shutting down until the storm moves through, possibly disrupting gasoline supplies.

“We’ll see retail prices move up in every nook and cranny of the country through this very uncertain weekend,” said Tom Kloza, an analyst with the Oil Price Information Service.

Kloza said an increase of 5 to 15 cents per gallon was most likely, but a spike of up to 25 cents by Labor Day was possible.

“The good news is this isn’t Hurricane Katrina,” said Patrick DeHaan, an analyst with GasBuddy. That storm in August 2005 caused about a 40-cent increase overnight, he said.

Perhaps of most concern is the staggering amount of rain Harvey is forecast to drop.

“The 15 inches of rainfall, including localized potential for totals in the range of 30 inches, expected from Corpus Christi to Port Arthur, Texas, may bring the largest interruption to Gulf Coast refining operations,” Ethan Bellamy, senior energy research analyst at Milwaukeebased Baird, said in a note to clients.

“Depending on if and how much lasting damage refining capacity sustains from flooding, gasoline prices could rise as inventories tighten,” Bellamy said in an email.

More than 50% of the country’s refinery capacity is in the Gulf Coast in an area that runs from Alabama to the southeastern tip of Texas near Brownsville, according to the U.S. Energy Information Administration.

Whatever impact the storm has is likely to be short-lived, Ritterbusch said.

“Prices are going to be headed right back down once this thing subsides,” he said.