Harvey fuels 30-cent hike in local gas prices

Prices could drop in next two weeks — if Irma doesn't hit

London Nickerson fills his vehicle with gas Tuesday at the Phillips 66 off McCarty and Monroe streets. Gas prices have risen around 30 cents locally as oil companies struggle to get refineries back online after Hurricane Harvey hit southern Texas.
London Nickerson fills his vehicle with gas Tuesday at the Phillips 66 off McCarty and Monroe streets. Gas prices have risen around 30 cents locally as oil companies struggle to get refineries back online after Hurricane Harvey hit southern Texas.

Mid-Missourians' pocketbooks are feeling the effects from Hurricane Harvey as oil companies struggle to get refineries and oil pipelines back online after the hurricane hit southern Texas last week.

The price of unleaded gasoline in Jefferson City rose from around $2.19 per gallon early last week to an average of about $2.49 per gallon Tuesday, according to gasbuddy.com.

One local expert said prices should be back to normal in about two weeks as more refineries come back online. But another local business owner said new threats posed by Hurricane Irma already are hampering the oil market.

Hurricane Harvey caused 20-30 percent of U.S. oil refining capacity to shut down in Texas cities like Houston, Corpus Christi and Beaumont. The largest oil refinery in the United States, a facility in Port Arthur that refines 600,000 barrels a day, temporarily shut down Aug. 30. Exxon Mobil also temporarily closed a major refinery in Beaumont.

Ron Leone, executive director of the Jefferson City-based lobbying group the Missouri Petroleum Marketers & Convenience Store Association, said the majority of Missouri's gasoline comes from Gulf Coast refineries. Shutting down a refinery takes several days, and bringing one back online also takes several days, even if there's no damage, he said.

He's cautiously optimistic gas prices could return to normal soon.

"What everybody is thinking is one to two weeks," Leone said. "It might be less."

Leone cautioned crews are still surveying damage to refineries and oil platforms in the Gulf Coast area.

Gas prices averaged $2.49 per gallon in Cole County and $2.47 per gallon in neighboring Boone County on Tuesday, according to gasbuddy.com.

The price in Missouri for a gallon of unleaded gas rose from an average of about $2.15 per gallon Aug. 28 to an average of $2.47 per gallon Sept. 5. Pike County in eastern Missouri had the highest average gas prices statewide at $2.60 per gallon.

Nationally, the price of a gallon of unleaded gas rose from an average of $2.37 per gallon Aug. 28 to $2.66 per gallon Sept. 5.

John Kolb, president of Jefferson City Oil Co., which distributes gas under the Phillips, Sinclair, Conoco and Shell brands, said the problem is simple: Supply got tighter, so prices are rising because supply shut down and demand rose.

"That's economics 101," Kolb said.

The price of U.S. West Texas Intermediate crude rallied about 3 percent Tuesday from an opening price of $47.28 to a peak of $48.88 as refineries and pipelines shut down by Harvey came back online. About 3 million barrels per day, or 16 percent of U.S. refining capacity, remained offline or in preliminary restart mode Monday evening, according to CNBC.

Pipelines moving fuel from Houston to St. Louis, Tulsa, Chicago and Dallas were back in operation, CNBC reported.

"When something hits the Gulf, the ripples are widespread and felt immediately," Leone said.

Another threat that could drive gas prices up again may be lurking east of the Bahamas. Hurricane Irma reached Category 5 hurricane status with winds of 185 mph Tuesday, about 180 miles east of Antigua.

Some forecasts show the hurricane hitting Miami nearly head-on, though the hurricane could turn east and back out to sea. It also could veer east and hit parts of the Carolinas or veer west and hit parts of western Florida and the other Gulf states like Louisiana.

Leone said there's still too much unknown about Irma's path to know how it will impact oil markets and infrastructure. Kolb said, though, that the storm's presence is already being felt.

"It's hurting the market today," Kolb said. "It could happen, so people have to make contingencies."

U.S. gasoline futures dipped about 4 percent Tuesday from an opening price of $1.75 per gallon to a low of $1.67 per gallon.

Kolb said Irma will impact tankers sailing into Gulf and Florida ports carrying imported oil from European refineries. He also said Irma could temporarily shut down oil pipelines, which could force more oil to be transported by semitruck.

Those delays could make it slightly longer before prices fall back to normal, Kolb said.

Overall, Leone said, the damage to oil infrastructure, excluding the loss of life, is far worse than from Hurricane Katrina, which hit parts of Louisiana in 2005, and Hurricane Ike, which hit just east of Houston in 2008.

Leone warned while hurricane season peaks in mid- to late August, it runs until November. Gas prices could rise again if another hurricane hits the United States.