GASOLINE PRICE /SUPPLY ISSUES CONCERNING HURRICANE IKE
- Yesterday, the wholesale price of gasoline at the Gulf Coast Terminals rose by $1.40, to $4.25 per gallon, with concerns that refineries along the Texas Gulf Coast will be damaged and/or temporarily shut down. As a result, we could see retail gasoline price spike up to 30 cents per gallon over the next few days.
- Exactly how high those prices will go is not entirely known and much depends on how badly - if any damage at all - the refineries in Texas are damaged by Ike.
- Even if the refineries sustain little or no damage, they may be shut down for a period of 5 to 7 days, thus tightening gasoline supplies.
- Unfortunately, the hurricane could not pick a worse path as the Houston/Galveston area is the nation's largest oil refining area. Texas is home to 26 refineries overall that account for one-fourth of U.S. refining capacity and most are situated along the Gulf Coast in places such as Houston, Port Arthur and Corpus Christi.
- Refineries are constructed to withstand high winds and can weather a category 1 or 2 hurricane with little or no damage but flooding can be problematic too. Again, a lot depends on what strength the hurricane is at when it strikes the Texas Coast. Should Ike ramp-up to a category 3 or 4 storm, then refineries will most certainly sustain critical damage.
- What is strange is that crude oil prices continue to trade around the $100 per barrel mark but gasoline is most certainly going to spike up. This points to the fact that all concerns are on the refining side, rather than the production side, i.e., crude oil production via off shore oil wells.
- Motorists can realistically expect to see spot outages of gasoline throughout the southeast over the next week or so but there is no need to panic and stations will not go long before the next shipment of gasoline arrives.
Please get the message out to media that "panic buying" will create consumer induced gas shortages. We do not advise motorists to top off their tanks and fill multiple containers of gasoline...there is no need for this. Motorists should fill their tanks as they normally would.
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