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Hurricane Harvey: Gas Prices Might Not Go Up Because of Supply

Two schools of thought: There's a lot of gas, and the refineries were hit hard

INDIANAPOLIS--You've seen gas prices go up over 16 cents in the past week in Indiana, said Gasbuddy.com, Sunday. But, that rise had nothing to do with Hurricane Harvey. But, what you will pay for gas has a lot to do with the old economic theory of supply and demand.

There are two schools of thought on it.

 

Gasbuddy.com senior petroleum analyst Patrick DeHaan is predicting that because refineries in the Houston area are closed for now, gas prices will go up.

"Prices will likely rise nearly country wide heading into Labor Day, from rural towns in the Rockies to major cities in the Midwest and West Coast- nearly everyone will feel a bit of a pinch at the pump from Harvey. The impact could linger for several weeks or longer, depending on how long it takes Texas refiners to return to normal operations," he said.

"In addition, the situation could worsen should more shutdowns or outages happen in the coming week as Harvey continues to drop feet of rain on already flooded Texas."

Supply and Demand

But oil analyst Trilby Lundberg, with the Lundberg Survey, said there might not be enough demand to guarantee prices will go up sharply.

"I Houston, believe it or not, the price is down from two weeks ago by about two cents per gallon," sahe said, though the damage from Harvey has not had time to translate to gas prices.

"There could be long-lasting serious damage from flooding, from the amount of water engulfing precious facilities. That can't be known at this point."

But, it's the supply that could keep gas prices in check.

"There is plenty of gasoline around. We are exporting so much that some of those volumes could simply stay at home. And demand in some areas, to an important degree, will be destroyed. That is, people not consuming," said Lundberg.

The average price for gas in Indiana Monday morning was $2.37, matching the national average.

PHOTO: Chris Davis/Emmis

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