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.
Today’s national average of $2.36 is up two cents over last week, seven cents more than a month ago and 15 cents more expensive than a year ago.
“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 Martha Meade, manager of Public and Government Affairs for AAA Mid-Atlantic. “The effects of Hurricane Harvey are not fully known at this point and may push pump prices higher as Labor Day draws closer.”
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.
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.
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