Posted in: Storm Updates,
by Patrick DeHaan on Oct 29, 2012 10:41 AM
It's the million dollar question: what impact will Hurricane Sandy have on gasoline prices? There are rumors swirling about as fast as the winds Sandy is throwing at areas of the East Coast.
What's the ultimate answer? There isn't one just yet- Sandy is a storm that is shutting down a region that isn't used to seeing such weather related issues- forecasting gas prices in such a climate is significantly more difficult than if this were to strike the Gulf Coast, for example.
Factors at play:
1) Two major refineries are shutting down- Hess' 70,000bpd refinery in Port Reading, NJ, and Phillips 66 will be temporarily closing its 238,000bpd refinery in Linden, NJ. When refineries shut down, it generally has an immediate impact on wholesale gasoline prices as supply drops.
2) Major cities shutting down. This will reduce demand for gasoline and other fuels perhaps enough that there isn't a significant, fast paced rise in retail prices. NYC schools are shut, NYC transportation is shut, many people will be staying home- this will reduce the impact that refineries going down will have on prices.
3) Flooding. Hurricane Sandy will likely bring torrential rains to several refineries, and this is the wild card. How long refineries will be down is certainly going to be key here. When demand comes back, when schools are open, when NYC is essentially again open for business, will refineries be back online to provide for the demand of motorists? If they aren't, it could mean an impact.
Bottom line: at this writing, I'm not expecting a significant jump in prices in the affected areas. Will you see some stations raising prices? Yes, its very likely. But it won't be like the price jumps we saw this past spring. If you need gas, get it, but don't run out filling up every vehicle, as that may strain the system. Compared to other storms that have hit, I'd rate Sandy a 5 on a 1-10 (10 being most panicked) in regards to gas prices. I would have rated Hurricane Katrina a 10.
Hang in there, we'll be posting updates all day about this storm and the impact at the pump.