Winter storm will cause gas prices to rise
Some analysts see cost nearing $3 by summer
Gasoline prices are expected to rise 10 to 20 cents a gallon in the coming days after winter storms knocked out about a dozen refineries in Texas, capping a sharp run-up in prices since Halloween and possibly heralding a move toward $3 by summer as the pandemic eases.
Regular unleaded gas averaged $2.54 a gallon nationally Wednesday, up two cents from the previous day, according to AAA.
The refinery outages have removed 3.5 million to 4 million, or about 20%, of the nation’s oil refining capacity, according to fuel-saving app Gasbuddy and the Oil Price Information Service (OPIS). The refineries shut down due to power outages and shortages of natural gas, which are needed to run the facilities, said Tom Kloza, chief global head of energy analysis at OPIS.
Refineries also don’t work well in subfreezing temperatures, said Patrick Dehaan, head of petroleum analysis at Gasbuddy.
Wholesale prices have edged up 10 to 14 cents a gallon and retail prices should follow by Monday, Kloza said.
Pump prices already have jumped from $2.10 a gallon in late November, Dehaan said. That followed a surge in crude oil prices in the wake of OPEC production cutbacks and anticipation of a spike in global demand by late spring as a COVID-19 vaccine becomes widely distributed, Dehaan said. Since late October, West Texas Intermediate, the U.S. benchmark crude oil, has climbed from about $35 a barrel to $61.
Gas prices will likely average about $2.70 a gallon within days, analysts said, but should fall back near current levels by March. But Flynn and Dehaan said refiners will begin to switch to cleaner – and more expensive – summer gasoline blends next month, nudging prices higher again.
Flynn said widespread vaccinations and Americans’ return to the road will likely push gas prices to $3 a gallon by late spring. Dehaan predicts $2.60 $2.80 but said $3 is possible.
“The era of low gasoline prices has ended and we are entering a new era of higher prices,” said analyst Phil Flynn of the Price Futures Group.
“It’s not a march to $3,” Kloza said. To get to $3, you really need to get $80 a barrel.”