Oklahoma gas prices holding steady in wake of Hurricane Harvey

OKLAHOMA CITY – U.S. gasoline futures climbed to two-year highs on Monday after Hurricane Harvey forced widespread shutdowns of Texas oil refineries.

At least 10 refineries have been knocked offline by historic flooding in the Houston and Corpus Christi regions. The outages in America’s energy hub will significantly curtail the supply of gasoline.

Gasoline futures, which reflect wholesale prices to gas stations, jumped 3% on Monday. While significant, that represents a much calmer reaction than the initial 7% spike on Sunday night.

It can take about a week for big changes in futures prices to hit drivers at the pump. Tom Kloza, head of global of energy analysis at the Oil Price Information Service, said he expected retail gas prices to go up about 15 cents a gallon, perhaps more along the Gulf Coast.

“This is not going to have an apocalyptic impact on what we pay at the pump,” he said.

Kloza said retail prices haven’t gone up more significantly because gas stations “don’t want to be the evil guy who raises prices during the storm.”

“No doubt, Harvey has impacted operations and access to refineries in the Gulf Coast. However a clear understanding of overall damage at the refineries is unknown,” said Mark Madeja, AAA spokesman. “Here in Oklahoma, we’re holding steady and actually up only 2.5 cents over last week. Time will tell as to when refineries can return to full operational status, and [whether] Oklahoma will experience any significant price increases at the pump.”

Valero said it did not have “substantial refinery impacts” at its Corpus Christi and Three Rivers facilities. The company said it’s working with the government to evaluate whether the local infrastructure — such as roads, power and ports — will allow the refineries to resume operations.

Goldman Sachs also predicted that the economic damage to the Gulf Coast will cause a drop in driving that outweighs the loss of the refineries — in other words, that the storm will be a bigger hit to demand for gas than supply.

“Houston is one of the country’s largest cities and has a very large gasoline demand,” said Rob Smith, a director at IHS Markit. For all intents and purposes, there’s little to no gasoline consumption in that market right now.”