Gas Prices Are Still Rising, But The Pace Slows

Posted September 04, 2017

It's a holiday weekend and Harvey ripped through the Texas coastline. Prices have jumped nearly 20 cents since the storm made landfall one week ago; the national average now sits at $2.52 - the highest average price in at least two years. The contract rebounded 2.8% on Thursday but is still heading for a weekly decline of 1.9%. Still he said "The outlook for most of the country is for higher prices but not necessarily shortages".

Until the spike following Harvey, Buffalo's gas prices were relatively stable. Last week, those same drivers were paying about $2.09 a gallon.

Gasoline prices in Butler, PA went from $2.59/gallon to now $2.79/gallon, with a possible increase of yet another 10-cents. This was the region where the oil bulls failed last month and so the selling can be expected to continue to be stronger in this region when the prices arrive there the next time.

Gas at some stations in Pennsylvania are as high as $3 a gallon for regular gas.

Suppliers on the Louisiana Gulf Coast are now sending energy to areas hit hard by Harvey instead of to Florida, which is now getting gasoline on barges from the NY region. Hurricane Harvey shut at least 4.4 million barrels per day (bpd) of refining capacity.

"At this moment now, we're talking about somewhere around 15 to 16 percent of all U.S. refining capacity offline", Patrick DeHaan, a senior petroleum analyst at GasBuddy, a firm that monitors gasoline pricing, told me. "The bottleneck is at the refining level".

The reduced availability of fuel forced the Colonial Pipeline, which provides fuel from refineries near the Gulf of Mexico to the U.S. Northeast, to reduce supplies. That refinery has not been affected by the storm, which has hammered the Gulf Coast for several days.

Harvey was not the only influence on pump prices this week.

The average in Washington state rose to $2.97 heading into Labor Day weekend. It represents a 16.7 percent rise in the average price from a year ago. But that price did not yet fully reflect Harvey's impact.

Even though the hurricane did not reach the oil-rich Permian Basin of West Texas, there have been reports of problems getting crude oil transported out by pipeline to the Gulf coast because of distribution and refinery problems. The supply of crude oil will temporarily surpass the usual demand, which is what's sending its price downward.

"We had a half a tank, but chose to get more, just in case", said Maria Linares, a school teacher whose husband was topping their car's tank. Energy officials will have a clearer picture of the total damage to oil refineries once the flood waters subside.

All six refineries in the Corpus Christi area, seven refineries in the Houston-Galveston area, and two refineries in the Beaumont-Port Arthur area were shut down or in the process of shutting down, according to public reports. "Refineries are slowly coming on line, but it's going to take a while".