Retail gasoline prices in Texas remained steady from Sunday to Monday, increasing just less than 1/2 a penny from $3.522 to $3526. Nationally gas prices remained at $3.67 a gallon. There was no increase nationally from Sunday to Monday. Meanwhile, on international commodities markets, the price of light sweet crude oil, which is refined into gasoline, has dropped. Traders concluded it was unlikely that Hurricane Gustav, which has been downgraded to a Category Two storm, would severely damage the nation’s oil drilling or refining capacity. “The area where the hurricane struck is home to a quarter of U.S. oil output and 15 percent of natural gas output, it will be later in the week when crews can determine the condition of those facilities and AAA Texas Public Affairs is closely watching the developments,” said AAA Texas Corporate Communications Manager Dan Ronan.
To prevent shortages and in anticipation of possible gasoline supply issues in the region directly impacted by Gustav, the U.S. EPA has issued a temporary waiver of the area’s clean gasoline requirements to allow the use of other, and perhaps more readily available, gasoline blends. It is normal for areas that are hit by hurricanes to experience localized fuel shortages because bulk fuel storage facilities are usually shut down for the most intense portion of the storm and the distribution of fuel to stations is interrupted at a time when many consumers are rushing to fill their vehicle’s gasoline tanks or purchase fuel for portable generators or other storm-related equipment. These kinds of shortages are usually short-lived and price hikes associated with them are normally contained by state anti-price-gouging statutes that limit price increases on essential commodities.
AAA Texas believes that if the hurricane continues its current trajectory gasoline availability and prices beyond the storm-affected areas should not be a problem immediately after the storm.
Analysts are attributing this to weather reports indicating Hurricane Gustav is less powerful than previously predicted. If it is found that oil availability is a serious problem following the storm, the President of the United States has the authority to make oil available from the nation’s Strategic Petroleum Reserve. The reserve was created to protect the United States economy from major disruptions in oil availability. While gasoline inventories might normally be a major concern due to the number of refineries that have had to shut down, demand for gasoline has been relatively weak this year and stocks have been in much better shape this year than last. Consumers should nevertheless prepare themselves for the possible return of higher gasoline prices this fall if significant and lasting damage is done to the refineries.
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