Hurricane Harvey has battered the Texas coast, leaving billions of dollars in damage and even greater human suffering in its wake. Another aspect of the historic storm is the extent to which it could disrupt gas supply (and potentially raise prices) due to damage to Houston, of the nation’s largest oil and gas refining centers.
The Energy Information Administration (EIA) estimates the Texas Gulf Coast’s refining capacity at 4.944 million barrels per day (bpd) and the nearby Louisiana Gulf Coast at 3.696 million bpd. As of August 28, Forbes predicted that 32 percent of the previously mentioned Gulf Coast capacity could face shutdowns from a storm. Forbes reported that 2.2 million bpd of refining capacity had already been shut down, at the time of that prediction.
So, what does this loss of oil refinery capacity mean for consumers? In another article, Forbes predicted a $0.10 increase per gallon in the price of gasoline. Meanwhile, Commodities trader Dennis Gartman forecasted increases of as much as $0.35 per gallon.
With a fall in the available supply comes a spike in demand, particularly in Texas and in other areas close to Houston. ABC News reported that Texas drivers have been scrambling to fill their cars up as a consequence of stations that do not have nearly enough gasoline to go around (and have in fact been closing down until they can get refills), and ABC also noted that stations in the Dallas area have been increasing their per-gallon prices. One station in downtown Dallas was charging $3.97 per gallon of 89-octane gasoline. While supply is an issue, one major problem is a rush of drivers looking to get gas before stations run out, even if they don’t need gas. This puts further pressure on supply.
While the supply of gasoline will eventually recover, the problem may be compounded by the Labor Day holiday weekend, during which many people drive for the last big weekend of the summer. It may be prudent to plan ahead when filling up for gasoline, and consumers living in the states affected by Harvey’s impact on supply may want to consider only getting gas when they know they will need it.