Market Insider

Gas prices could jump more than 10 percent by Labor Day weekend

Key Points
  • Gas prices could jump 10 percent or more by Labor Day across parts of the U.S., based on the storm-related shutdown of refineries on the Gulf Coast.
  • Prices could rise even more, depending on how long it takes to restart operations and bring workers back into flooded areas.
  • More than 2 million barrels of refining capacity were taken offline because of the storm, and it is still unclear whether there is damage to refineries that are in the flooded area.
Brendan Smialowski | AFP | Getty Images

Gasoline prices could jump 10 percent or more by Labor Day weekend, based on the Harvey-related shutdown of refineries along the Gulf Coast.

The price jump is expected to be temporary, if refineries can get back up and running. However, there remains a risk that prices could go much higher if there is any damage to a major refinery or pipeline – or it takes a long time to bring the refineries back on line.

More than 2 million barrels of refining capacity were taken off line, as the storm threatened Texas with unprecedented rain and flooding.

Patrick DeHaan, senior petroleum analyst at Gas Buddy, said he expects to see gas prices start to move up Tuesday and Wednesday as retailers make adjustments to rising wholesale prices.

"The Gulf Coast over the next week will probably see prices go up anywhere from 15 cents to 30 cents per gallon," he said. Prices for some parts of the Midwest like Michigan, Indiana and Ohio will probably rise about 15 to 25 cents, he said.

Tom Kloza, global head of energy analysis at Oil Price Information Service, said he expects to see a 10- to 15-cent rise in the national average – at $2.36 per gallon of unleaded fuel Tuesday. According to AAA, the price of unleaded is three cents higher per gallon than it was a week ago.

Analysts said it is unclear whether any Houston area refineries have had serious damage, since operators are not providing much information. It is also unclear how soon workers will be able to return.

"There's some catching up to do. Corpus Christi looks as though everything is fine, and they're restarting in two or three days. Bottom line is less than week's worth of refining capacity was lost in Corpus and it's coming back," Kloza said.