Analysis by Dr. Nancy Yamaguchi

The Energy Information Administration (EIA) released its weekly data on diesel and gasoline retail prices for the week ended September 4th, 2017. Hurricane Harvey caused price increases across the country, with the sharpest price hikes seen in the Gulf Coast, East Coast, and Midwest markets. At the national average level, retail diesel prices increased by 15.3 cents per gallon, while gasoline prices jumped by 28.0 cents per gallon. For the week, diesel prices rose by 5.9%, while gasoline prices catapulted by 11.7%.

The fuel market remains in the process of coping with disruptions caused by Hurricane Harvey. Now on the horizon is Hurricane Irma, which could cause massive destruction in Florida if it remains on its predicted path. Hurricane Irma is a category 5 hurricane, with wind speeds of 185 miles per hour. It has been declared the strongest storm ever to form in the open Atlantic Ocean. Landfall occurred in the Caribbean today. It is forecast to hit Antigua through Puerto Rico today, Cuba by Saturday, then possibly hit Florida.

For the current week ended September 4th, diesel prices rose by 15.3 cents to arrive at an average price of $2.758/gallon. Diesel prices have risen in eight out of the last nine weeks. In the nine weeks between the week ended June 26th and the week ended September 4th, diesel prices rose by 29.3 cents per gallon.

U.S. retail gasoline prices vaulted by 28.0 cents for the week ended September 4th, to an average price of $2.679/gallon. Prices rose in all five PADDs, with the largest increases in the Gulf Coast, East Coast, and Midwest markets. Until Hurricane Harvey hit, consumers had enjoyed a summer driving season with unusually sedate prices. Between the beginning of June and the week ended August 21st, gasoline prices actually declined by 5.4 cents/gallon. However, in the two weeks following, gasoline prices jumped by 31.9 cents/gallon.

Hurricane Irma has contributed to the market risk-off cycle. Cruise lines insurance stocks dropped sharply. WTI crude opened at $48.59/b this session, a significant increase of $1.31 from yesterday’s opening. Currently this morning, WTI prices are $49.22/b, up by $0.63 since today’s opening. The daily price range has been $48.52-$49.28/b.