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U.S. consumers had seen prices at the price at the pump decline for seven consecutive weeks since Memorial Day Weekend and now gasoline prices are edging upward. While there are many factors at different times that impact the price you pay, it's extremely important at this time of year to watch Mother Nature.
Storms approaching the Gulf of Mexico can change things in a hurry. Nearly half of the nation’s gasoline is produced by the heavy concentration of refineries in the Gulf of Mexico and we’ve seen sudden consequences that occur when they are either temporarily shut down, or, transportation of their finished products is disrupted.
When Hurricanes Gustav and Ike rolled into the Gulf in September 2008, most refineries had already begun reducing their crude stock in anticipation of the seasonal decline in consumer demand. But with suspended refinery production compounded by hurricane closings, the U.S. faced a sudden and significant fuel shortage. Retailers reported that their wholesale prices soared by $1.50 per gallon overnight. Many said they didn’t see that much of a hike even when Katrina struck and, consequently, many stations implemented rationing.
According to the U.S. Dept. of Energy, over 40 percent of the nation’s petroleum refining capacity (148 refineries) is located along the Gulf coast, as well as almost 30 percent of total U.S. natural gas processing plant capacity. Particularly during Hurricane season, adverse weather can bring immediate changes in refinery capacity, shipping, delivery to ports and pipelines.
Remember, federal law requires oil rig evacuations and closures of facilities well before storms reach landfall or wind speeds become too threatening. The Atlantic Hurricane season and its tropical storm activity runs from June 1 through Nov. 30.