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Your Voice: Why do Pa. gas prices go up when a storm hits a faraway state?

Question: Why is it every time Texas or another state gets a severe storm, we all have to pay for it at the gas station? - Anonymous

Great question. The answer revolves around the unique industrial character of the Gulf Coast.

The center of U.S. fuel production is in the Texas and Louisiana portions of the Gulf Coast. Nearly half of the nation’s oil-refining capacity is found in those two states, most of it along that coast. Combined, they can process about 8.7 million barrels of crude oil every day.

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In addition, the Gulf area produces a large amount of the nation’s crude oil, and is home to the only deep-water oil port in the U.S., which can receive up to 2 million barrels of foreign crude oil daily.

When a large storm hits, all of those facilities shut down for safety, putting a crimp in the U.S. fuel supply. And when supply drops but demand stays the same, prices increase.

For example, when Hurricane Katrina hit in 2005, the average U.S. gas price jumped nearly a half-dollar overnight.

The average gas price in the U.S. on Aug. 24, the day before Harvey hit Texas, was $2.35, according to GasBuddy. A week later, by Aug. 31, it had risen to $2.52. It peaked at $2.67 on Sept. 6-7 and before dropping by a few cents to $2.61 on Sept. 18.

It’s impossible to say how much of that increase is because of Harvey and how much is simply normal market factors, but it’s very likely that unusual spike is largely due to the devastating storm.

The duration of the price hike often depends on how much damage that occurs at those facilities. It also depends on factors like plant workers’ availability – can they get to work? Are they too busy dealing with the storm’s effect on their family and home to return to work?

Only time will tell how long it will take to get all of those facilities back to running at normal capacity.

 

Cox Media Group

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