Hurricane Harvey may cause rise in gas prices
Officials say to expect increase up to 15 cents
With Hurricane Harvey barreling toward the energy-rich Texas Gulf Coast, gasoline prices are expected to tick upward as some refineries shut down capacity to brace for impact at the end of the summer driving season.
Experts are expecting anywhere from a 5-cent to 15-cent increase in the price of a gallon of gasoline over the next several days as Harvey forces refineries in its path to take precautionary measures to prevent damage.
The storm would have to get much more severe than its current classification as a Category 3 hurricane to do much damage to gasoline refineries, analysts said.
But predicted refinery closures in places such as Houston are still expected to have an impact, potentially disrupting supplies and increasing prices.
For example, the Flint Hills Resources plants in Corpus Christi, Texas, which collectively produce nearly 300,000 barrels per day, are shutting down while the storm passes.
Nationally, the average price of gas was $2.35 per gallon on Friday afternoon, up 2.2 cents from a week ago and up 15.2 cents from a year ago, according to consumer information site GasBuddy.com.
“Obviously if a refinery is underwater it can’t do a whole lot to produce gasoline,” GasBuddy petroleum analyst Patrick DeHaan said. “It’s just a matter of time before they start curtailing production at those refineries.”
About one-third of the nation’s gasoline refining capacity is located in the Gulf Coast region.
Oil Price Information Service analyst Tom Kloza said it’s “not likely to be an apocalyptic or seminal event” for energy. But he noted that wholesale gasoline prices are jumping 10 cents to 20 cents per gallon at Gulf refineries, which will likely lead to nationwide increases in the retail price within the next two to four days.
Increases will likely be highest in the Gulf states and lowest in western markets and states in the nation’s heartland.
But prices will quickly recede after a temporary spike, Kloza said, as kids go back to school and heavy travel subsides.
Hurricane Katrina was the last storm to significantly undermine U.S. gasoline supplies, Kloza said.
Although rain can cause short-term outages, wind and storm surge pose the greatest risk of long-term damage, Kloza said.
But storms that cause major disruption are a “very rare bird,” he said.
Even with winds projected in the range of more than 90 mph, “it doesn’t look like wind should be too much of an issue in terms of long-term damage,” DeHaan said.