CT News Junkie | Connecticut Drivers Facing Spike in Gas Prices As Texas Refineries Struggle to Recover From Harvey

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Connecticut Drivers Facing Spike in Gas Prices As Texas Refineries Struggle to Recover From Harvey

by | Sep 18, 2017 10:00am
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Posted to: Business, Consumer Protection, The Economy, Energy Sector, Energy, Transportation, Weather

After a sudden jump following Hurricane Harvey, gas prices have leveled off — but they still remain more than 10 percent higher than they were a month ago.

On Monday, Connecticut drivers paid an average of $2.85 a gallon at the pump, the same as on Sunday and 2 cents less than they paid a week ago. But the price is more than 38 cents higher than the $2.47 average price a month ago, according to AAA.

A similar trend is playing out nationally: drivers paid an average of $2.62 on Monday, a few cents lower than a week ago, but up 28 cents from $2.34 a month ago.

Prices rose soon after Hurricane Harvey devastated parts of Texas, damaging oil refineries and reducing gas supplies. The storm, which brought strong winds and massive flooding, took offline about one-quarter — about 2.5 million per day — of the Gulf Coast’s oil refining capacity, according to the Oil Price Information Service.

The storm forced the closure of eight Texas refineries and spurred others to operate at reduced capacities. In the immediate aftermath of the storm, gas prices nationwide jumped 4 cents in a single week, the largest increase of the summer, according to AAA.

“No doubt, Harvey has impacted operations and access to refineries in the Gulf Coast.  However a clear understanding of overall damage at the refineries is unknown,” AAA spokeswoman Jeanette Casselano said in a statement. “Despite the country’s overall oil and gasoline inventories being at or above five-year highs, until there is clear picture of damage and an idea when refineries can return to full operational status, gas prices will continue to increase.”

Earlier this week, for the first time in more than two weeks, gas prices seemed to be holding steady, according to AAA, despite Hurricane Irma making landfall in the Southeast last weekend. Though power outages, impassable roads, and other challenges are making it difficult to get gas to people in Florida, prices have so far remained level.

But that still could change, even though the storms have passed, cautioned Casselano.

“As refineries slowly come back online, states along the East Coast can expect gas prices to remain volatile as a result of already tight supply levels stemming from Harvey combined with the impact of Hurricane Irma,” she said.

Gas prices in Connecticut usually are higher than the national average, in part because of taxes but also because the fuel has to be transported here from refineries that typically are located in the south.

Nearly half of the retail cost of gasoline, or 45 percent, is attributed to the price of crude oil. Another 21 percent goes to federal and state taxes, 18 percent is refining costs and profits, and 16 percent is distribution and marketing, according to the U.S. Energy Information Administration (EIA).

Crude oil is the largest factor affecting the retail price of gas, but many factors can cause crude prices to spike, including weather-related or geopolitical uncertainty. Crude prices often rise in response to disruptions in the international or domestic supply chain, according to the EIA, such as what is happening now.

According to GasBuddy’s user-generated data, the lowest price reported for gasoline in Connecticut over the last 24 hours was $2.35 per gallon at Cory’s on Route 12 in Groton. The highest price reported over the last 24 hours was $3.58 per gallon at the Gulf station on Sullivan Avenue in South Windsor.

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