Posted in: Gas Prices,
by Patrick DeHaan on Aug 24, 2012 03:28 PM
T.S. Issac is just a tropical storm, but it is already drawing eyes to it, and concern, as wholesale gasoline prices ceased two days of steep decline and promptly spiked after the path that showed U.S. landfall was released.
On August 16 and 17, wholesale gasoline prices, the prices that stations pay, dropped 4-9c/gal, depending on what region of the country. This led to a leveling off in the national average over last weekend. Then Monday, a new storm was developing in the tropics, which spawned a tropical disturbance- Isaac. Markets initially showed little concern, but after the storm was upgraded to a tropical depression, and then storm, markets started to shift their focus to the developing storm.
Between this past Monday and Thursday's NYMEX close, wholesale gasoline prices advanced over 10c/gal in a majority of the country. This now sets the stage for a new higher push in gasoline prices, just in time for the Labor Day weekend. While many may blame the holiday, and as tempting as that may be, it's this organized storm that is the foundation for price increases.
BP has already shut an offshore oil rig in the Gulf of Mexico, and more oil companies may follow suit as Isaac brushes up against significant oil infrastructure in the Gulf. All eyes in the petroleum industry will be focused on the path of Isaac. While this storm certainly doesn't appear to have anywhere near the strength of major storm, since the storm will be entering the Gulf over the weekend, while markets are closed, could mean a very volatile Monday on markets. Should this storm balloon over the weekend, we could see big spikes in the Gulf region next week.