AAA: Harvey hikes gas prices to 2017 high ahead of Labor Day weekend
AAA estimates that close to 1 million Virginians will travel this Labor Day holiday weekend. The vast majority of those traveling will be doing so on Virginia roadways where gas prices have been increasing on a daily basis due Hurricane Harvey’s impact in the Gulf of Mexico.
Significant gas price increases are already a reality across the nation and prices are expected to continue to increase for about 8-10 days, possibly longer.
“The near-term combination of numerous refinery and pipeline shut downs, tightened access to supply levels in the Gulf and anticipated high gasoline demand surrounding Labor Day weekend, means motorists may not have seen the full impact of Harvey at the pump,” noted Martha Mitchell Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “Consumers will see a short-term spike in the coming weeks with gas prices likely topping $2.50/gal nationally, but quickly dropping by mid to late September.” AAA expects gas prices to continue to climb until there is a clear picture of the extent of damage to refineries, infrastructure and pipelines and knowledge of when they will be able to return to full operational status.
As Americans celebrate the final holiday weekend of summer, prices at the pump could continue to rise beyond Labor Day. The national average could top $2.50 for the first time in two years. However, drivers can look forward to mid-September as prices rebalance when refineries get back online, stations make the switchover to less expensive winter blend gasoline, and seasonal demand tapers off.
Gas prices in Virginia are up 22 cents since before the storm.
Average price per gallon of self-serve, regular gasoline.
Gas prices provided by AAA: gasprices.aaa.com.
Change Since Yesterday
Up 7 cents
Up 11 cents
Up 8 cents
Up 11 cents
Up 12 cents
Up 9 cents
Base the outages that have already occurred, and if refineries can resume operations fairly quickly, AAA expects gas price increases of 25 cents or more in the commonwealth. AAA does not expect refineries to be offline for months, as early reports indicate minimal to no significant damage to Corpus Christi and Houston refineries.
In addition, Refineries in Corpus Christi are already in the process of restarting and hope to be operational in as little as 3-5 days. This is good news and optimistically an indication of more good news in the days and weeks ahead. When Corpus Christi refineries come back online and Houston/Galveston beginning to dry out, the nation will have more insight into how long total recovery and restoration efforts may take.
Price increases are not, at this time, expected to be as severe as they were after hurricane Katrina when prices increased 80 cents per gallon. This is due primarily to solid supply levels across the country and as refineries are not expected to be shut down for an extended period of time as they were after Katrina when 6 refineries were shuttered for about 6 months.
“When you see what’s going on in Houston, you can hardly refer to an increase in gas prices as ‘pain’ at the pump”, said Martha Mitchell Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic. “That said, the timing of the increase is unfortunate for all those planning one final road trip this summer, as motorists are expected to pay the highest Labor Day gas prices in two years.”
Supply/Shortages? Yesterday, in addition to refinery shut downs in the gulf before and during the hurricane, the Colonial Pipeline (the largest fuel transport system in the U.S), which provides nearly 40 percent of gas to the southeast, suspended operations.
Although this news is somewhat concerning, the US Energy Information Administration is currently reporting a nationwide supply of 230 million barrels, the highest level in five years, and enough to meet demand in the near term. At this time, gasoline shortages are not expected in Virginia.
President Trump has also tapped an emergency stockpile of crude oil in response to the major refinery. The Energy Department said it will release 500,000 barrels of oil from the Strategic Petroleum Reserve to help keep gas price inventory solid and to help curb higher increases at the pump.
This week, Governor McAuliffe, along with other governors in states expected to experience the greatest impacts from Hurricane Harvey, requested that the Environmental Protection Agency waive the requirement to produce summer blends of gasoline at this time.
Summer blends are more expensive to produce, thus switching over now to winter blends should help ease price increases at the pump. The environmental Protection Agency granted the waiver on Wednesday.
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