The national average for a gallon of unleaded gasoline has gone up and down again this week and the Mid-Atlantic region has followed suit. However, gas prices in the days ahead could potentially head in one direction, upward, as the Texas Gulf Coast, home to nearly a quarter of the country’s gasoline production, recovers from Hurricane Harvey. Several oil fields, platforms and refineries have closed down operations and production.
CNBC reports key oil and gas facilities along the Texas Gulf Coast have temporarily shut down as Hurricane Harvey pounds the region with torrential rain and high winds, virtually assuring gasoline prices will rise in the storm's aftermath.Even before the Harvey made landfall late Friday, dozens of oil and gas platforms had been evacuated, at least three refineries had closed and at least two petrochemical plants had suspended operations.
How soon they reopen depends on the severity of flooding and the resumption of power to the areas. Experts say it's still too early to say, with the storm still moving through the region. But they believe gas prices will increase 5 cents, to 25 cents per gallon.
According to AAA Mid-Atlantic, at the close of NYMEX trading Thursday, WTI crude oil settled at $47.87 per barrel, 64 cents lower than the previous day’s closing price on the premise that less crude would be needed with the storm-induced reduction in operations. WTI has yet to rise above $50 per barrel so far in August, with July 31 being the last time it was above that mark. The hurricane’s impact on crude oil is likely to be a significant reduction of crude imports into the Gulf Coast, affecting refineries’ crude production rates.
Martha Meade, manager of Public and Government Affairs for AAA Mid-Atlantic said in a release that Hurricane Harvey could impact gas prices in the coming weeks.
“The busy summer driving season is coming to an end and Mid-Atlantic fuel prices remain slightly lower or at the same price they were last week,” said Meade. “The effects of Hurricane Harvey are not fully known at this point and may push pump prices higher as Labor Day draws closer.”
AAA Mid-Atlantic said post-hurricane, refineries tend to return to full operations status as quickly as possible, and imports are an option to return supply to pre-hurricane levels. In the short term, motorists may experience an uptick at the pump, particularly in the Gulf Coast region, as crude and gasoline inventory levels are impacted. Hurricanes typically cause an immediate increase in fuel purchases in the affected region, but also a slowdown in retail demand as residents evacuate.