Gas Prices Expected to Rise in the Wake of Hurricane Harvey
The weekend brought with it quite the storm. Hurricane Harvey, a category four hurricane, hit Texas coastlines hard this weekend. The winds, rainfall, and massive amounts of flooding caused businesses to shut down and began widespread evacuations in large coastal cities like Corpus Christi and Houston.
Compare these two shots of the same spot in Houston to understand the level of the floods. pic.twitter.com/4apTzuzNck
— John O’Shea (@politicalhackuk) August 27, 2017
Oil refineries are prominent throughout the coast of Texas; the storm has caused at least 10 refineries in Houston and Corpus Christi to shut down, including Exxon Mobil‘s Baytown refinery. Combined, these refineries normally produce upwards of 2 million barrels of oil per day. This group of production sites is responsible for approximately 22 percent of all oil produced on the U.S. Gulf Coast; their shutdown cuts out nearly a quarter of all coastline production.
The shutdown of these refineries is stripping the nation of its oil supply, causing the price per barrel to skyrocket, with the increase expected to be around seven percent, according to CNN. Gasoline is currently at its highest price point since July 2015.
Matt Smith, director of commodity research at ClipperData, has no doubt that the hurricane damage and inflation of gas prices are related; “The pop in gasoline prices is an immediate response to the closure of refineries on the U.S. Gulf Coast,” said Smith. “Fears of a supply crunch are sending prices charging higher.”
Thankfully, these rising gas prices are expected to level off and decrease relatively quickly. The exact timing of this price drop is not determined just yet, but experts estimate its decrease within the next two to four weeks.