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Business, Energy, Environment, STEM, Uncategorized

September 2017 Gas Prices Significantly Higher Than Last Year

Hector-Retamal-photographer

People stand in a gas line in northwestern Puerto Rico on 09.22.2017 (Hector Retamal, photographer/AFP)

One of my FaceBook friends posted the following question to my wall: What is up with these gas prices?  I chuckled as I wrote the following response: How much more is your fill-up costing you?

Gas prices have actually dropped 8.5¢ over the past two weeks, but they are higher than one year ago. Fuel insights data from GasBuddy.com show the average price of a gallon of gasoline within the United States:

$2.565       Today’s price

$2.565       Yesterday

$2.589       Last Week

$2.362       Last Month

$2.208       Last Year

What the above data tells me is that we are paying 20¢ more than a month ago for a gallon of gasoline. This is just about the time that Hurricane Harvey was making landfall along the southeastern part of the Texas coastline. While I am happy to report that gas prices are also falling along with the autumn temperatures, it should come as no surprise that most motorists would prefer to see pre-Hurricane Harvey prices. And as the same inquisitive person expressed in a later response, what’s up with that? 

[See What Causes Gasoline Price Spikes?  for an explanation of the five (5) key factors that influence gas prices.]

Hurricanes and natural disasters have and can cause major disruptions in gasoline markets where they occur.  The Houston Chronicle reported last week that 15 of 20 refineries that went down or slowed production during Hurricane Harvey have almost fully recovered, with about 1 million barrels a day of refining capacity still offline. [Ref 1] The news outlet also reported that U.S. oil production in the Gulf of Mexico has recovered.

No sooner than the floodwaters had receded in Houston and efforts were underway to resume normal operations, Hurricane Irma made landfall on the Florida Keys, September 10, 2017. Unlike Texas, Florida does not have any petroleum refineries. Gasoline for the Sunshine State is primarily supplied by marine movement of petroleum products from domestic and international sources. Florida’s gasoline markets were significantly disrupted prior to Hurricane Irma making landfall in Florida. This was due to an increased demand for gasoline as residents evacuated the coastal areas. The increased traffic and high demand also created logistical challenges in supplying fuel to the areas that needed them before Hurricane Irma made landfall. As Hurricane Irma approached, shipping traffic was diverted and ports closed, stopping the flow of petroleum products into Florida.

A similar but different story is being played out in the U.S. Territory of Puerto Rico. Hurricane Maria swept over the U.S. territory of Puerto Rico a week ago (Wednesday, September 20, 2017) and left the entire island and 3.5 million people without electrical power. A week later, American citizens in this U.S. territory are still standing, but just barely. They are in need of everything, especially, food, water and clothing, and gasoline and diesel fuels.

Gasoline shortages and rationing were implemented in Puerto Rico before Hurricane Maria made landfall. In addition to damaged shipping ports and airport runways, the Jones Act which prohibits foreign-flagged vessels from picking up and delivering fuel between U.S. ports, appears to be stalling gasoline and other supplies from reaching the island. According to USA Today [Ref 2], “the Jones Act…was suspended from Sept. 8 through 22 to allow shipments to Texas and Florida in the wake of Hurricanes Harvey and Irma. Puerto Rico was included under that waiver for petroleum products. However, the Trump administration hasn’t issued a similar waiver yet for Puerto Rico specifically after Hurricane Maria, despite massive fuel shortages on the island that relies on diesel for much of its power.”

One should be able to distill from the above information that natural disasters, supply and demand, logistical issues, and pre-existing regulations can have strong influences on U.S. gasoline prices.

Sources Cited:

  1. Gulf Coast energy complex still licking wounds after Hurricane Harvey, by Collin Eaton for the Houston Chronicle, Wednesday, September 20, 2017, http://www.chron.com/business/energy/article/Gulf-Coast-energy-complex-still-licking-wounds-12214895.php
  2. Why Puerto Rico is being denied shipping deliveries of fuel, by Bart Jansen for USAToday, September 27, 2017, http://www.msn.com/en-us/news/us/why-puerto-rico-is-being-denied-shipping-deliveries-of-fuel/ar-AAswO69?li=BBmkt5R&ocid=spartandhp

About Vi Brown

Vi is principal and CEO of Prophecy Consulting Group, LLC, an Arizona firm that provides business and engineering services to private and public clients. Prior to establishing her consulting practice in 2001, Vi worked with Motorola, Maricopa County Government, Pacific Gas & Electric, CH2M Hill, and Procter & Gamble. As an adjunct faculty member, Vi teaches undergraduate calculus classes and graduate level environmental courses. She is also a professional speaker.

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