Pittsburgh gasoline prices spike in wake of Harvey

As Hurricane Harvey slammed the Houston area last week, gasoline prices in the Pittsburgh area shot up 9 percent to average $2.88 a gallon on Tuesday, according to GasBuddy.com, a price-tracking website.

The 24-cent increase is the largest weekly spike in the region recorded since the tracking service began keeping detailed data in 2007.

The regional increase follows the U.S. gasoline increase of 25 cents to $2.66 a gallon on Tuesday — the largest since Hurricane Katrina hit the New Orleans area in 2005. That pushed up national prices 49 cents a gallon, according to GasBuddy.

“It’s been one of the most challenging weeks faced in years,” said Patrick DeHaan, senior petroleum analyst for GasBuddy, in the website’ weekly media release. “Until Texas can recover from Harvey, gasoline prices will likely continue to remain elevated.”

Hurricanes that make landfall along the Gulf Coast can wreak havoc on gasoline markets because many of the country’s largest oil refineries operate in Texas and Louisiana. Hurricane Harvey last week temporarily knocked out roughly 25 percent of the country’s refining capacity.

Put another way, the capacity to process 4.2 million barrels of oil into other products like gasoline was taken offline, which automatically crimps supply and causes prices to shoot up. 

It could be weeks or longer before the refineries are at full power, Mr. DeHaan estimated. In addition to Harvey, forecasters are bracing for the threat of a Hurricane Irma, a storm that formed in the Atlantic Ocean last week and is expected to hit Puerto Rico, Cuba and possibly South Florida later this week.

“Much remains in the air, but the situation promises to be challenging if Irma threatens the U.S. mainland,” Mr. DeHaan wrote. 

Some Houston-area refineries are coming back online this week, which analysts say could alleviate supply pressures.

Valero Energy says its refineries in Corpus Christi and Texas City, which together process 518,000 barrels a day, have recovered to pre-hurricane levels of operation. Valero also plans to resume operations at the 293,000-barrels-a-day Port Arthur refinery, and the 191,000-barrels-a-day Houston refinery “as transportation and logistics infrastructure becomes more available.”

The higher pump prices shattered an otherwise tranquil 2017 for motorists in Pittsburgh, where gasoline prices had moved an average of two cents each week. For 12 weeks spanning May to July, fuel prices dropped by about 18 cents on average. In August, the region’s gasoline prices barely moved a cent. 

That stands in contrast with most summers, when drivers see the biggest gasoline price increases of the year. Most summers, seasonal pressures push up gasoline prices during summer months as demand from motorists typically rises with warmer weather.

Crude oil prices, the biggest factor in the price of gasoline, have remained low as major global producers like Saudi Arabia continue to drill more oil than can be consumed. Through Harvey’s destruction, the global oil price benchmark has remained calm, suggesting that when refineries come back online, American gasoline prices could return to normal levels.

Last year, Pittsburgh-area prices rose 73 cents during the spring and summer months.

Pittsburgh-area gasoline sits higher than in most of the country. As of Tuesday, Pennsylvania has the eighth-most expensive price per gallon, in part because the state has the highest fuel taxes in the country, according to GasBuddy.com.

Compared with previous years, the region’s pumps are on average 50 cents more expensive than this time one year ago; 33 cents more expensive than this time in 2015; and 67 cents cheaper than this time in 2014.

Daniel Moore: dmoore@post-gazette.com, 412-263-2743 and Twitter @PGdanielmoore.

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