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Hurricane Effect: Rising Gas Prices
With many Gulf Coast refineries shuttered in advance of the category 4 Hurricane Harvey's landfall on Friday evening between Port Aransas and Port O'Connor, Texas, motorists should expect to see some price increases at the gas pump, with most experts suggesting it would be from a nickel to 15 cents.
"About one-third of the nation's gasoline refining capacity is located in the Gulf Coast region," reports Nathan Bomey, business reporter for USA TODAY (although Reuters put it at "more than 45 percent.").
But prices will quickly recede after a temporary spike, said Tom Kloza, global energy analyst with Oil Price Information Services, as kids go back to school and heavy travel subsides.
The U.S. has plenty of gasoline in storage, but the issue would be whether flooding impacts the ability of refiners to both move out finished gasoline and bring in crude oil. If key refining operations are flooded, it could take months to restore service.
"Kloza said if refineries are knocked out, then prices could spike sharply, but it could take time to know if there is serious damage," reports Patti Domm, CNBC Markets Editor. However, he adds that the local price increases will be mitigated by state laws that prevent gouging.
You'll start seeing it this weekend. The people that will also feel the brunt are consumers in the mid-Atlantic and Southeast that are being supplied by gasoline from the Colonial pipeline, as well as some markets in the Midwest that are receiving Gulf Coast supplies," said Andrew Lipow, president of Lipow Oil Associates.
The national average Friday was $2.35 per gallon for unleaded regular, according to AAA. On Saturday, they were up only a penny.
Oil production shut down
Harvey also affected the nation's oil production in the Gulf well before landfall, reports Irina Slav for OilPrice.com on Aug. 24, on drilling operations that closed down before Friday.
About 17 percent of U.S. crude oil output comes from the Gulf of Mexico, or 1.661 million bpd as of May, according to the Energy Information Administration.
Some of Harvey's expected effects on the Gulf's population and economy were posted here on Saturday.