After jumping 15 percent in just over two weeks, gasoline prices at the pump appear to be peaking nationally and could soon start to drop.
The last effects of Hurricane Harvey's impact on gasoline prices was still being felt across the U.S. this weekend, and for Florida residents, Hurricane Irma compounded the situation by creating fuel shortages.
Barring another major hurricane in the Gulf Coast, analysts say prices should soon start to drop back to the $2.30 to $2.35 per gallon range where they were before Harvey slammed into Texas, sending flood waters into the heart of the U.S. refining industry. At its height, 27 percent of U.S. refining capacity was offline, compared with an estimated 4.5 percent that is still impaired.
The average price at the pump for unleaded gasoline Monday was $2.67 per gallon, according to AAA.
Irma, which rumbled along the Florida coast Sunday and Monday, has left gasoline in short supply in the southeastern state. But those shortages are expected to be temporary as offshore shipments move into Florida's ports.
"They're going to have gas to some of these stations in a couple of hours," said John Kilduff, energy analyst with Again Capital. Based on reports from Florida's key Tampa Bay port, gasoline supplies should begin moving on to trucks later Monday.
Harvey sent prices flying in many parts of the country, as supplies were cut, forcing key pipelines to run at reduced capacity because of shortages. But those problems are easing, as repairs have been made and supplies restored.
The Colonial Pipeline, which takes fuel from Texas to the Southeast and Mid-Atlantic reopened a portion of the pipeline that had been closed between Houston and Lake Charles, La.
Gasoline imports from Europe also increased to make up for the shortfall.
"There's a flotilla of cargoes coming. Right now, they're headed toward New York, but there's some thought that could change and they could get diverted down south," added Kilduff.
Gasoline prices in Florida were actually a penny per gallon lower Monday than on Sunday, at $2.72 per gallon, still 44 cents higher than a month ago, according to AAA. The lack of driving activity because of the storm should be big enough to impact demand, resulting in lower gasoline purchases and lower prices.
On Wall Street, gasoline futures sank, with RBOB futures off 2.3 percent in Monday trading at $1.60 per gallon. In the spot market, which affects wholesale prices, gasoline was also plummeting. The price of unleaded gasoline in New York Harbor dropped more than 11 cents to $1.8250 per gallon, and was down about 5 cents per gallon in other areas, according to Tom Kloza, global head of energy analysis at Oil Price Information Service.
"There's no question in my mind, we are past peak. The bloom is off the rose for gas prices. There's some question about when Florida returns to normal for availability of gasoline. I think that will be this weekend, and ports will start to reopen today and tomorrow," said Kloza.
Andrew Lipow, president of Lipow Oil Associates, said there are three refineries that are still shut, and others are in the process of reopening. Lipow estimates about 4.5 percent of refining capacity is still down, due in large part to shutdowns at Exxon's Beaumont refinery, Total's Port Arthur refinery, and Shell's Deer Park refinery. "The rest are all in some stage of restarting," he said. Exxon's Baytown refinery, the second largest in the U.S., is slowly restarting, but it will take a while to fully restore operations.
Baytown was flooded, as was Motiva, the largest refinery in the U.S. "Everything in Beaumont and Port Arthur had some amount of flood damage," he said.
Lipow explained that while Florida does not have refining operations, its gasoline is shipped into three main terminal locations: Tampa, Ft. Lauderdale and Jacksonville. The Port of Jacksonville is still experiencing flooding on the St. Johns River, and he said it's yet to be seen whether there are issues there.
The lack of demand for gasoline should help the market get to normal. "There's a significant amount of demand that's lost in Florida. Of course, there was an upfront bump in demand as people evacuated the region but as they hunkered down over the next couple of days, there was a significant loss of gasoline demand as well as jet fuel demand as airports are closed," said Lipow.