Hurricane Isaias threatens Gulf refineries as gas ticks up to $4.37
Gas prices rose about a penny overnight to a $4.37 national average Friday, according to AAA, as Hurricane Isaias approaches Gulf Coast refineries. Nearly 500,000 barrels a day of refining capacity sits in or near the storm's projected path. Diesel, already close to its record, could climb further if those plants shut down.
Drivers could feel Hurricane Isaias at the pump, even far from the Gulf Coast.
AAA's national average for regular gas was $4.37 a gallon Friday, up about a penny from Thursday. That is still a bit below a week ago, but about $1.26 more than a year ago. Diesel averaged $6.28, not far from its record of $6.53 set Sept. 22.
The worry now is supply. Nearly 500,000 barrels a day of refining capacity sits in or near the storm's projected path, Bloomberg reported in a story carried by Transport Topics. U.S. fuel supplies are already tight, so even small losses could cause sharp price jumps.
The plant most at risk is Chevron's refinery in Pascagoula, Mississippi, which sits inside the hurricane warning. It makes gasoline, diesel and jet fuel. Chevron said it is making "appropriate preparations." Smaller plants near Mobile and in Tuscaloosa, Alabama, are also in the path.
Patrick De Haan of GasBuddy said flooding could knock refineries in the storm's path offline for up to 10 days, Insurance Business reported. "There is no slack in the system," said Andy Lipow of Lipow Oil Associates.
Offshore oil is also affected. Companies have shut in a large share of Gulf crude output ahead of the storm. Shell halted production at five offshore sites, and Chevron began shutting four of its own.
Diesel matters even for people who never buy it, because it fuels the trucks and farm equipment that move goods. Insurance Business said a long refinery outage would hit trucking, shipping and farm businesses hardest as they head into the busy fall season.
As of the National Hurricane Center's advisory 10A, Isaias had top winds near 105 mph. The center expects landfall on the northern Gulf Coast tonight or early Saturday.
Production often comes back quickly if a storm passes without serious damage. Risk modeler Chuck Watson of Enki Research told Bloomberg he expects the shutdowns to be short unless equipment is badly hurt.
What we know: Gas is up slightly Friday, and key refineries are in the storm's path.
What we don't: Whether Isaias will damage refineries enough to push prices higher.
Where outlets agree Bloomberg and Insurance Business both report that Chevron's Pascagoula refinery is the most exposed plant in the storm's path.
Where they differ Bloomberg says offshore producers shut in more than 60% of Gulf crude output, while Insurance Business puts the share at about 25% as of Thursday.