Gas prices can rise due to winter storms
The Texas winter season storm is anticipated to press gas costs up throughout the U.S. by about 10 cents per gallon within the next couple of days. That follows a five-cent per gallon jump in unleaded gasoline in the last week that drove the national average to $2.51 per gallon, about 7 cents higher than a year earlier, according to AAA. Power blackouts and freezing weather in the south have actually ruined the oil and gas production centers in Texas. Refineries have also been cutting back on production and are shutting down due to the lack of power and to protect electrical energy for the general public. There were more than 4 million individuals without power in Texas since Tuesday afternoon, according to NBC News. " What we have is an electrical generating problem," stated Andy Lipow, president of Lipow Oil Associates. "You don't have natural gas, and you do not have electrical energy. It's tough for refiners to turn unrefined into fuel." He said a variety of refineries closed down due to the absence of gas and the electrical energy shortfall, including Motiva in Port Arthur, Texas, the biggest refinery in the U.S. " This is temporary until the weather heats up," Lipow said. RBOB gas futures-- that is, reformulated blendstock for oxygenated mixing-- were up 3.5% at $1.75 per gallon. The rise in gasoline rates has actually been the greatest factor to customer inflation. In the January consumer price index, the fuel index increased 7.4% while total costs rose simply 0.3%. Gasoline prices have been increasing with the expense of oil, which is up 23% given that the start of the year. Tom Kloza, international head of energy analysis at Oil Price Information Service, anticipates that about 4 million barrels of refining capacity are offline in Texas and other states. Total U.S. capacity has to do with 18 million barrels, and the market was operating at about 80% capacity prior to the storms, he stated. " I think they've had orderly shutdowns. They have not had any damage or anything knocked out," stated Kloza. "My guess is this resembles a blip in the system, however it's not a big deal." He expects the high cost of the year to be about $2.80 per gallon, ahead of the summer season driving season. Kloza said need is down about 15% from in 2015, but by late March, need this year will be much higher. During in 2015's pandemic shutdowns, need dropped sharply starting in the week of March 27. Kloza stated there is plenty of gas supply, so the shutdowns must not have a long term effect. "We could flirt with $2.60," he stated. The jump in fuel prices could be higher if oil starts to move higher. " Every dollar boost in crude translates to about 2.3 cents boost in the cost of gasoline," Kloza stated. "This is not the next stop on the road to $3. This is the next stop on the road to $2.65 to $2.70.". West Texas Intermediate oil futures were up simply 0.3% to $59.66 per barrel, after earlier trading above $60. " You have the problem of the refineries being down, so need is not there," stated John Kilduff, partner with Again Capital. That topped gains in gasoline. "We're up about $3 from recently.".