Motorists have braced themselves against the cold. Now they should brace for higher gas prices.
The national average price of gasoline may jump 10-20 cents per gallon from its current price of $2.54 per gallon over the next two weeks, according to oil and gas analysts.
Prices hovered around $2.69 a gallon Friday at stations around Williams County.
Millions of barrels of refining capacity have been lost due to the extreme cold in the South, with little relief on the horizon as overall gasoline demand continues to recover from the COVID-19 pandemic, according to Patrick De Haan, head of petroleum analysis for GasBuddy.com, a travel and navigation app that reviews more than 150,000 gas stations in North America.
“The quicker the affected refineries are able to come back online, the better, and perhaps less painful for motorists than if they remain out of service for even longer,” said De Haan. “Oil prices have continued to (rise) as global oil demand recovers from the worst of the COVID-19 pandemic, and now the extreme cold weather shutting refineries down, motorists just can’t seem to catch a break. We probably won’t see much, if any, relief anytime soon.”
Oil analyst Andy Lipow agreed.
“The cold weather resulted in a loss of crude oil production of about 1 million barrels, and also lost about 50% of natural gas production due to freezing temps,” Lipow told NBC News this past week.
Expect the national average to rise to $2.65-$2.75 per gallon, resulting in the highest prices since 2019 and the highest seasonal prices in over five years, De Haan said.
De Haan said 11 refineries in Texas and one in Kansas have at least partially shut due to the extremely cold weather. He noted that refineries are exposed to the elements, and unlike facilities in the northern U.S. which are prepared for cold weather, few refineries in the South have protection from these historically low temperatures.
Crude oil prices are rising, too, spurring on the increase in retail gas prices, added Jeanette Casselano McGee, AAA spokesperson, on gasprices.aaa.com.
“Crude, not demand, has been the main factor driving gas price increases this year,” McGee said.
$3 A GALLON
GasBuddy calculations show 3.48 million barrels of refining capacity were offline as of midday last Tuesday, or nearly 20% of total U.S. refining capacity, just under the amount shut down due to Hurricane Harvey in 2017.
“Every day that these refineries are not operating the country is consuming more gasoline than it produces, swiftly impacting inventories ... and with gasoline demand likely to accelerate as we approach March and April, the price increases may not quickly fade” De Haan said.
Oil analyst Phil Flynn, of the Price Futures Group, told USA Today he expects widespread COVID-19 vaccinations and Americans’ return to the road will likely push gas prices to $3 a gallon by late spring.
Jeff Erb, general manager for the Bryan-based Saneholtz-McKarns Main Stop regional chain of gas stations/convenience stores, said Thursday that the wholesale price that Main Stop is paying “has gone up dramatically in the past 10 days.”
He said several factors are in play, including weather that has temporarily closed refineries in the South and uncertainty over possible new energy policies from the new Biden administration in Washington, D.C.
Erb said while $3 a gallon is possible by the spring, he expects prices to settle around $2.80 a gallon.
“I don’t know what the (price per gallon) ceiling is. At least for now I don’t see our retail prices staying in the (current) $2.60 range for very long ... I think the $2.80 range is likely,” Erb said.
De Haan predicts prices to settle around $2.80 a gallon, but says $3 is possible, as refineries eventually begin to switch over to Environmental Protection Agency-mandated cleaner summer fuels.