Texas Deep Freeze Pushes Gas Prices Higher
The deep freeze in Texas has left several of the nation’s largest refineries idled, pushing the price at the pump even higher just ahead of a switch to a more expensive blend of summer gasoline, analysts said.
Automotive club AAA reported a national average retail price of $2.65 for a gallon of regular unleaded gasoline for Feb. 23, about 5 percent higher than one week ago. Because of elevated state taxes, California has the highest average price in the continental United States at $3.59 per gallon. Because of its proximity to the dense network of refineries in southern U.S. states, Mississippi has the lowest price in the country at $2.30 per gallon.
Below-freezing temperatures across the southern U.S. last week forced several area refineries offline and stifled gas production, driving prices higher. The East Coast, which already relies on imports to compensate for the lack of pipeline infrastructure feeding the area, is largely expected to see a big uptick in gasoline coming from European refiners.
“The storm shut up to 4 million barrels per day of refining capacity at its peak,” Matthew Kohlman, an associate editorial director for Platts, told Zenger News from Houston. “The bad news for consumers is that the gain comes as U.S. refiners transition to higher-cost summer gasoline grades over the next month.”
The winter blend of gasoline is less expensive to produce because, unlike the summer blend, it requires fewer processes to prevent evaporation. Kohlman said, however, that refineries are bouncing back and the elevated level of imports into the East Coast should keep a lid on prices.
Looking at market factors driving the prices higher, Patrick DeHaan, the senior petroleum analyst at GasBuddy, said from Chicago the demand was already rebounding faster than supplies. For him, there’s not much relief in sight. With new cases of Covid-19 starting to decline and with social restrictions easing, “all I see is continued pressure at the pump,” he said.
It could nevertheless be a rocky road ahead for U.S. refineries. Patricia Hemsworth, a senior vice president at Paragon Markets, told Zenger from New York that southern U.S. refineries that went through a so-called hot shutdown, closing ahead of the cold weather, will bounce back quicker than those that didn’t.
But by the end of the week, she said, “we will be back” to some sense of normality.
The price of gas at this time last year averaged $2.47 per gallon.
(Edited by Bryan Wilkes and Virginia Isabel Van Zandt)