Possible Effect of Sandy on Gasoline Prices

The extent of Hurricane Sandy’s impact on the current gasoline price will be dependent on the amount of damage it brings and the duration of crude production’s slow down.

For example, the demand drop from the East Coast, with the shutting down of business, postponement of airline travel and closing of public transit, as well as people staying home, may slighty lower the region’s gasoline prices, said analyst Phil Flynn of Chicago’s Price Futures Group.

The latest crude price per barrel was already lower by 1.1 percent, or $1, at $85.32.

According to chief oil analyst Tom Kloza of the Oil Price Information Service, demand for crude and refined commodities are expected to fall, and the drop will be almost as major as what was seen after Hurricane Katrina made landfall in 2005.

On the other hand, if refineries in the East Coast will be affected, consumers will surely experience the same (supply issues), according to AAA Chicago’s spokeswoman Beth Mosher. She particularly pointed to the Phillips 66 Bayway Refinery located in Linden, New Jersey. The refinery processes around 240,000 bpd, and was in the immediate path of the storm.

The Linden refinery was shut down by Phillips, while a majority of other huge refineries in the region were working at lower capacity.

Current gasoline prices in Illinois reflect a downward trend which is expected at this period of the year. The average gasoline price today for regular unleaded gas is $3.496 per gallon. That rate is lower compared to last month’s level of $3.957 per gallon according to the fuel gauge report of the AAA.

By: Chris Termeer

Chris Termeer

Chris Termeer is an oil and gas consultant, industry commentator and analyst. His book, Fundamentals of Investing in Oil and Gas provides a comprehensive overview of all aspects of the oil and gas industry, including exploration, drilling, production, storage, transportation and refining, to name but a few.

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