HOLY SMOKES! Retail gas prices to reach $5 in the South before Ike hits, over $4 here!

UP-TO-DATE HURRICANE IKE INFO OR CLICK “HURRICANE CENTRAL” NEXT TO THE BLINKING Q&A LINK

If you have any interests in the South (Texas, Lousiana) area, you might want to inform them to stockpile gas at ANY PRICE under $4. Grand Rapids will likely also see a price hike to over $4, with more hikes coming.

Currently, gasoline for delivery in the South/Gulf area is trading $1.40 higher PER GALLON to $4.56 a GALLON. That is the wholesale price, so retail prices there will likely hurdle over $5/gallon.

ExxonMobil today is beginning to shut the largest refinery in the United States (590,000bpd capacity) as Ike nears and parts of Texas come under a mandatory evacuation.

Texas has a large number of refineries that are at high risk with this storm. These refineries lack the upgrades that some refineries got after Hurricane Katrina in 2005. The refineries at risk and their production (according to Wikipedia):

We are likely to see prices rise well over $4 here in Grand Rapids soon as a result of Ike. Nationwide prices will likely climb at least 10-20cents per gallon. With Ike hitting and the remnants of Gustav, we’re likely going to feel a hard pinch at the pump soon. We could even set new record highs.

Also getting updates this noon that the U.S. Coast Guard has closed the nation’s LARGEST petroleum port to any new vessel traffic due to Ike.

Continuing bad news from the Louisiana Offshore Oil Port (LOOP): The Louisiana Offshore Oil Port, which is the biggest U.S. oil-import terminal and handles 13 percent of imports, shut marine operations yesterday because of Ike.

This is going to get ugly. Stay on F and plan to cut usage where possible.

Worse case scenario is that we run low on crude oil in the Midwest, as the Gulf area provides much of our oil. At least the oil imports from Canada will continue to flow!

2 Comments

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  1. So then why is crude on the NYMEX barely above $100??

  2. That was a very nice post Patrick, between that and your new hurricane page it should really show people how big of a problem that this could potentially be. Right now it looks like we might luck out with the wind speed staying low (at 100 now), but the potential for damage is still there. Some of the refineries damaged in 2005 took over 6 months to get back to full capacity. It’s not like you can run down to the hardware store an pick up parts from the refinery isle. A lot of the parts take months to make replacements.

    Well, I was guessing that we would get a 10-15 cent increase in wholesale prices tonight and based on that I figured that Speedway would restore prices between $4.059 and $4.099.

    But, we ended up getting a 27 cent increase!!! So, $4.199+ very is possible!

    Sometimes when we have major increases like this or need to cross an even dollar, Speedway will decided to make a move to less than their normal restore markup. But, off the top of my head, I would guess that our cost is right around $4 and since it is a Friday anything they move to will have to last the weekend. So, I would be surprised if they did a small move. I also expect the oil companies to put the branded stations on allocation.

    Ryan: I really can’t figure out why after all of these years of the futures market reacting to potential problems, it hasn’t been reacting to a real supply problem. I guess the weak economy / dollar / demand cancel out major supply shortages.

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