Hurricane Harvey News: Gas Prices Expected to Increase After Facilities Closed Down in Houston
The arrival of Hurricane Harvey in the United States caused gasoline facilities to close down and it is expected to result in an increase in gas prices.
Gasoline facilities in the areas of Houston and Corpus Christi closed down before Hurricane Harvey made landfall last Friday. This was to lessen the anticipated damage that the storm would bring, USA Today reported.
It appears that the refineries in Houston survived with minimal or no damage done at all. However, the continuous downpour of rain might still have an effect on the plants, such as flooding and power outages.
The global head of energy analysis for the Oil Price Information Service, Tom Kloza, said that they were expecting Hurricane Harvey to be another Katrina-like event. It turned out that Hurricane Harvey was far from what Katrina brought to the country, although they are still gauging if there will be additional damages inflicted especially in Houston, where downpour is expected to reach 30 to 40 inches of rain.
Last Sunday, the average price of regular unleaded gasoline at the national level was $2.36 a gallon, from $2.35 the day before and $2.33 the week before. The U.S. gasoline futures spiked up 7 percent after Hurricane Harvey forced a minimum of 10 refineries to close down, CNN reported.
Matt Smith, director of commodity research at ClipperData, said that the increase in gasoline prices "is an immediate response to the closure of refineries on the U.S. Gulf Coast."
Kloza anticipates that prices will increase another five to 15 cents due to a surge in demand during the Labor Day holiday, which will contradict the pullback in the supply of gasoline. Usually, gas prices decrease 25 cents after Labor Day. But for this year, the prices are expected to stay in peak all throughout September before dropping.
Analysts said that the gasoline futures are at its highest level since July 2015. Gas prices are predictably going higher because Hurricane Harvey caused outages to refineries that carry up to 2.2 million barrels of crude oil.
