ARLINGTON, Va. — Harvey’s path cut through the heart of the U.S. oil industry. Now, the storm is fueling an increase in gasoline prices nationwide.
Asslammed into the Texas coast, it shut down some of the biggest oil and gas refineries in the country.
The Houston area accounts for more than a quarter of the nation’s gasoline production. Nearly 20 percent of the country’s daily gasoline refining capacity is now offline — that’s more than 2.5 million barrels a day.
That includes the Exxon-Mobile refinery in Baytown, Texas, which is the nation’s second-largest facility and typically produces 560,000 barrels a day.
Prices are up 4 cents nationally already, according to AAA.
Tamra Johnson from AAA expects those places to include hard-hit Gulf states ahead of the Labor Day holiday.
“We already anticipated that prices would go up about 5 cents around the country,” Johnson said. “Now maybe even 10 cents or even higher in some places.”
“A lot is still yet to be known in terms of refinery damage and if refiners are down for an extended period of time we could see those higher gas prices upwards of 20 to 30 cents,” Johnson added.
When Hurricane Katrina devastated New Orleans 12 years ago, gas prices spiked nationally by 46 cents. Any increase in energy costs from Harvey could extend beyond those at gas stations.
Economist Peter Morici also addressed the forthcoming pain at the pump.
“People will see higher prices trickle through not just higher gas prices, but also perhaps higher prices for fruits and vegetables, as it costs more to get them to market and a higher price for the airline ticket to go visit your mother at Christmas time,” he explained.
While price spikes after hurricanes are not uncommon, they tend to be short lived — assuming the refineries can come back online quickly.
Experts say the longer they stay offline, the larger the price increase and the longer it lasts.
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Source: CBS News – Moneywatch