Gas prices have spiked once again and mother nature is to blame this time. Hurricane Harvey has directly impacted residents of the Houston metro area in addition to the rest of the country who are consumers of the oil that is sourced from this region of the US. The Question is why and how long can we expect to see elevated prices at the pump?
Hurrican Harvey has ravaged Texas dumping an estimated 14 trillion gallons of water on the state. This equates to 2,000 gallons of water for every person in the world. As a result prices have jumped an average of 17-20 cents across the country totaling $2.52 per gallon according to AAA. July gas prices topped out at only $2.32. Some experts feel prices could inflate even higher between 5 and 15 cents in the coming weeks.
Harvey forced oil refineries to shut down, halting the production of crude oil. That equates to a reduction of 4.4 million barrels of oil per day or 25% of the United States total supply. Almost half of all crude oil in the US comes from the gulf coast region. This area easily allows for imports to come in from Mexico and Venezuela.
The reality of the situation is that rebuilding Houston and the surrounding areas is going to take years to complete. However, construction is underway. President Trump has requested $7.85 billion from FEMA fund the disaster loan program.
The good news is that two of the biggest companies will resume work Monday. Colonial and Explorer pipeline have worked hard to return to operation this week. Colonial will open it's main distillate line on Monday that travels from Houston to Herbert Texas. By Tuesday the company plans to open it's main gasoline line between the two cities. Colonial is responsible for 3 million barrels of gasoline, jet and diesel fuel per day. Explorer's Texas to Oklahoma pipeline has begun production as of Sunday and by Monday it plans to have it's Texas to Oklahoma pipeline back in action by Monday.
We can only hope that things to begin to return to normal in Texas soon. It's makes you wonder why a country that presumably has such built up reserves has an issue with supply and demand. With such devastation at the epicenter of the oil hub in the US the key is to be patient but be smart with our travel and oil consumption in the wake of this tragedy until things get back to normal.