As Expected, Gas Prices Spike Just In Time for Labor Day Weekend

By Paul Riegler on 31 August 2017
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Gasoline prices in New York in January 2015

Although it took a few days, the effects of Hurricane Harvey are finally beginning to be felt at the pump. The price for a gallon of regular unleaded fuel hit $2.45 on average, the highest recorded price so far this year according to the Automobile Association of America. The average price was only $2.37 three days ago.

The last time the national average price was in this range was August 2015, when the average price was $2.50. The price of a gallon of gasoline in February 2016 was $1.70.

The reason for the dramatic increase isn’t a decrease in inventory, however. It’s mostly fear. Oil markets are typically jittery and a major event such as Hurricane Harvey is enough to set off a short-term spike.

In some parts of Texas, however, it’s the drivers who are jittery as hundreds of filling stations have run out of fuel not due to a widespread gasoline shortage but a delay in production due to Harvey. GasBuddy, a company that tracks such information, reported that 123 stations in San Antonio were out of fuel as of Thursday at 6:30 p.m. local time. Some filling stations in the Dallas/Fort Worth area were also out of fuel and many drivers, fearing a shortage, lined up to fill their tanks.

To counter any short-term shortage, the Department of Energy released 500,000 barrels of oil from the nation’s Strategic Petroleum Reserve while ten Gulf Coast refineries remain shut down and several refineries and pipelines are operating at reduced rates. In addition, refiners in the Northeast are offsetting the lack of supply from Gulf Coast refineries.

Meanwhile, the largest increases have been seen in South Carolina (19 cents), Delaware (18 cents), Kentucky (17 cents), Georgia, Missouri, and North Carolina (all 16 cents), and Maryland (14 cents).

(Photo: Accura Media Group)