Hurricane Harvey likely to boost gas prices for US drivers
Posted August 24
Updated August 25
Hurricane Harvey is expected to hit a refinery-rich stretch of the Gulf Coast, and U.S. drivers could soon see the impact at the gas pump.
Some refineries are expected to shut down until the storm passes, possibly disrupting gasoline supplies.
Wholesale gasoline futures rose Thursday 5 cents, or 3 percent, to $1.66 per gallon, and experts say that will quickly show up on service-station signs.
"Starting (Thursday night), you could start to see the Harvey effect being factored into gas prices," said Patrick DeHaan, an analyst with GasBuddy. "The good news is this isn't Hurricane Katrina."
That Gulf storm in August 2005 caused about a 40-cent increase overnight, DeHaan said. We might not know the full impact of Harvey until Monday, when refineries have had a chance to assess damage, which could be caused by flooding or power outages, he said.
"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 if the hurricane hits a refining center.
Gas prices at stations in the Raleigh area were already up 6 to 8 cents a gallon by Friday afternoon.
"I have seen gas go up from $2.12 to $2.19," said Morris Jones of Kenly. "People just always look for problems and situations to incur profit."
Steve Byers, who owns a convenience store on Lake Wheeler Road in Raleigh, said that, with no nearby refineries, North Carolina is beholden to the Gulf's fuel supply.
"As soon as we find out what it costs us, that's when we put the price on the sign," Byers said. "We've seen the next load we get will be 6 to 7 cents more a gallon, and it all has to do with refining and location."
An Exxon station on Western Boulevard in Raleigh was selling gas for $2.14 Friday morning, but the price had jumped to $2.22 a gallon by the afternoon.
"I've seen the price of gas be real volatile," said Raymond Riggan, who drives for a living and says he gets frustrated when prices climb before a storm even hits. "It doesn't seem fair when that happens, but we do see it when these kinds of things happen."
Before the storm crept so close to the Texas Gulf Coast, the nationwide average price for a gallon of regular gasoline rose a penny this week to $2.35, according to AAA. A year ago, the average price was $2.19 a gallon.
Price swings and supply depend on the location and severity of the storm, industry observers said.
"Supplies might tighten up, but if the storm stays on the south end of the supply chain, that will help," said Gary Harris, executive director of the North Carolina Petroleum and Convenience Marketers Association.
"It depends on the storm, but there's certainly the possibility of at least short-term supply disruptions," said David McGowan, executive director of the North Carolina Petroleum Council.
About of third of the nation's oil refining is done of Texas and the Gulf of Mexico, and oil and natural gas operators have begun evacuating workers from offshore platforms.
The U.S. Bureau of Safety and Environmental Enforcement said that based on reports from operators at midday Thursday, workers had been removed from 39 platforms. The agency said that nearly 10 percent of oil production and 15 percent of natural gas output in the Gulf had been shut down.
Exxon Mobil shut down two of its platforms and was evacuating all personnel in the expected path of the storm, said spokeswoman Suann Guthrie. She said refineries were operating normally late Thursday.
AAA expects prices to remain high through the Labor Day holiday, so spokeswoman Sandra Horton said drivers shouldn't panic over prices.
"If they are sitting OK for the next couple of days, I think the best thing they can do is just not rush out and get the fuel," Horton said.