Mich. gas prices could spike 10 to 20 cents
Michigan motorists might want to top off the gas tank right away. Refinery closings as a result of Tropical Storm Harvey could drive up prices at gas pumps in the state an average of 10 cents to 20 cents per gallon as early as Tuesday, according to Patrick DeHaan, senior petroleum analyst with GasBuddy.com.
The average price for self-serve regular unleaded gasoline across the state is about $2.47 per gallon, according to AAA Michigan. That’s up 6 cents — about 2.5 percent — from a week ago. Metro Detroit’s current average is about $2.46 per gallon, about 3 cents more than last week’s average.
“I expect to start seeing prices at $2.60, $2.65, $2.69,” DeHaan said. Those increases could come as early as Tuesday, especially in Kalamazoo and Lansing, he said, before spreading to suburban Detroit.
Nearly a third of U.S. refining capacity sits in low-lying areas along the coast from Corpus Christi, Texas, to Lake Charles, Louisiana. Beyond the shutdown of refineries at risk of a direct strike from high winds, there’s the threat of flooding and potential power outages for gasoline supplies.
Refinery outages continued to spread Sunday, with about 2.2 million barrels per day of refining capacity down or being brought down, according to analysts at S&P Global.
Before the storm hit, refineries were already running at 93 percent to 94 percent of capacity, DeHann said. So there’s not a lot they can do to make up the difference.
Marathon Oil Corp., which operates a refinery in Detroit, did not immediately respond to a request for comment on whether production was being increased there.
Valero Energy Corp., whose two big Corpus Christi refineries escaped damage, said it was working with federal and Texas agencies and its business partners to determine what infrastructure was needed to resume refinery operations.
Royal Dutch Shell Plc’s Deer Park refinery and Exxon Mobil Corp.’s Baytown, Texas, complex shut down operations. Several pipelines were also closed, potentially stranding crude in Texas and interrupting gasoline supplies to other parts of the country.
Given the strictures faced by the refineries, “This is the dominoes starting to fall,” DeHaan said. “This is sort of slowly turning out to be the worst-case scenario.”
Wholesale gasoline prices for September delivery climbed 3.1 percent to $1.7183 a gallon on the New York Mercantile on Monday after rising to $1.7799 a gallon, the highest price for a front-month contract since July 2015.
The Associated Press and Bloomberg News contributed.