The price of a gallon of regular gas stood at $3.15 Monday, according AAA, up only a fraction of a penny from the previous day’s average, and down 1 cent from a week ago. But wholesale gasoline futures were about 5 cents higher in early trading Monday. They were up as much as 10 cents a gallon in Sunday night trading, suggesting retail prices could soon follow suit.
More than 95% of US oil production at offshore platforms and rigs in the Gulf of Mexico were shut down ahead of Hurricane Ida, according to the Bureau of Safety and Environmental Enforcement, the federal regulator overseeing those facilities. They will remain shut until further notice, said Tom Kloza, global head of energy analysis for the Oil Price Information Service, which tracks prices for AAA.
Most of the major refineries in the region are shuttered or running at reduced rates, Kloza said, with with no word yet when they’ll be back to normal.
Louisiana is home to three of the nation’s seven largest refineries, and accounts for 17.5% of the nation’s overall refining capacity at its 15 refineries, according to the US Energy Information Administration.
Although the flow of oil from offshore platforms and rigs was expected to return to normal within a few days flooding or prolonged power outages could keep the refineries and pipelines offline, which could also push gasoline prices up, Kloza said.
Another potential disruption could come from consumers themselves. In May, panic-buying at the pump exacerbated price surges and shortages during the shutdown of the the Colonial Pipeline.
“We have to watch for bad human behavior,” Kloza said. “It’s the week before Labor Day, which is normally a high-demand week anyway.”
Bracing for price spikes
The worst one-week spike of the last 30 years followed Hurricane Katrina in 2005. The average price of a gallon of regular gas shot up 46 cents, or 18%, to $3.07 a gallon, according to data from the EIA. It took two months for gas prices to return to pre-Katrina levels after that storm.
But that kind of spike is a worst-case scenario. In 2005, many refineries in the region were flooded and without power for months, Kloza said.
The greatest impact on gas prices will likely be in the Southeast, said Kloza, which was the area of the country with the cheapest gas ahead of the storm. All the states across the region have average prices below $3 a gallon today.
Another factor in the direction could be an upcoming meeting of OPEC oil ministers along with officials from Russia and several other major oil producers.