Remnants of Harvey Expected to Drive Gas Prices through the month
Prospect of Hurricane Irma May Impact Prices As Well
CHARLOTTE, N.C. (September 5, 2017)
The impact from Hurricane Harvey continues to drive up gas prices across the country. Gas prices spiked throughout the Carolinas over the Labor Day holiday, resulting in the highest statewide averages in more than two years. North Carolina's average is currently $2.62, the highest since July 14, 2015 and South Carolina is currently at $2.52 the highest since December 2, 2014. However, prices can be found even higher from pump to pump throughout both states.
AAA Carolinas estimates that just under a million North Carolinians spent the holiday with a road trip, with about half a million South Carolinians doing the same.
"We don't believe rising gas prices deterred motorists from taking their last holiday getaway of the summer," said AAA Carolinas spokesperson Tiffany Wright. "The summer driving season is officially over and typically this is when gas prices start their decline as demand goes down and the switch over to the lesser expensive winter blend of fuel takes place. Unfortunately the effects from Hurricane Harvey will slow this process."
In North Carolina, the statewide average has spiked 37 cents in a week, while it's rocketed 39 cents in a week's time for South Carolina.
At $2.65, the national gas price average is 27 cents more expensive on the week. Overall, gas prices are pennies away from topping the highest price ($2.67, August 15-18, 2015) Americans have paid for a gallon of gas in more than two years.
As Texas dries out from Harvey, all eyes are on Hurricane Irma, now a Category 5 hurricane, which currently is expected to hit the Leeward Islands of the Caribbean Tuesday night into Wednesday. A Hurricane Watch is in effect for the U.S. Virgin Islands and Puerto Rico. According to the National Hurricane Center, there is an increasing chance that the Florida Peninsula and the Florida Keys may see some impact this coming weekend. However, Irma's changing storm track could bring an altered forecast in the coming days.
"AAA will continue to monitor Irma's path and the potential impact the hurricane could have on Carolinians, as well as the refineries, pipelines and distribution," added Wright.
The Department of Energy (DOE) is reporting that eight Gulf Coast refineries are in the process of restarting, which accounts for about 10 percent of Gulf Coast refining capabilities. At its peak, Harvey shuttered 27 percent of U.S. processing capacity. No refineries have returned to normal rates, but at least four are operating at reduced rates. Meanwhile, pipelines forced to take pre-cautionary shut downs caused by Harvey either have resumed operations or are in the process of coming back online. This includes the Colonial Pipeline, which currently has only suspended the Texas operations, while the remainder of the system continues to operate with available supply.
In response to refineries and pipeline shutdowns, last week the DOE authorized the Strategic Petroleum Reserve (SPR) to negotiate and execute emergency exchange agreements authorizing 5.6 million barrels of crude oil to be released. In addition, DOE and the Environmental Protection Agency (EPA) have issued waivers to Colonial to accept more product into its pipeline.
With more than 50 inches of rain, Harvey set a record for the greatest amount of single-storm rainfall for the continental U.S.
States in the south, southeast and mid-Atlantic are most likely to see the biggest surges as these states receive the bulk of their supplies from the Gulf Coast. They could even see an additional surge if Hurricane Irma hits Florida this weekend. The good news is that consumers will see relief from the gas price spike towards the end of this month.
Losses in U.S. supply capability have catapulted retail prices to their highest levels since August 2015, but remain well below initial weeks of September 2011 through 2014, according to OPIS. The last two years have seen inordinately cheap gasoline as the driving season ended (Labor Day weekend) and AAA expects this to be the case come October.
Today, 74 percent of U.S. gas stations are selling gas for $2.75 or less while only seven percent are selling above $3/gallon.
AAA Carolinas, an affiliate of the American Automobile Association, is a not-for-profit organization that serves more than 2.1 million members and the public with travel, automobile and insurance services while being an advocate for the safety and security of all travelers.