Editor: There is a lot of speculation going on as to the impact Hurricane Harvey is going to have on gasoline prices. Should you believe the hype? Industry veteran and seasoned analyst Joe Petrowski dropped a quick note on on gas price predictions on what to expect.

The hype over rising gasoline prices because of Harvey and refinery shutdowns is all nonsense. Here is why:

  • The US consumes 14 million barrels of fuel (gasoline & diesel per day)
  • Demand is trending down seasonally (driving season) and secularly
  • We have almost 400 million barrels of refined products in stock so even if 10% of refineries were shut down for one year we would have supplies for one year of consumption
  • Retailers are now focused on volume retention like never before so “holding the line” on prices is the new mantra
  • Rules are in place to discourage any price increases to the upside and every state attorney general and bureaucrat is on hyper alert to gain a headline and torture a non-compliant “Oil Barron”
  • Reputational damage is too great for any retailer to try and take advantage of Harvey’s misery.
  • None of the pipelines or trucking infrastructure has been impaired.
  • Winter blend fuels will add less expensive blending components

The claim that prices will rise 20 to 25 cents is simply outrageous. I would predict 1 to 3 cents max over the next 3 weeks, then a resumption of the downtrend in prices.

 

JHP photo-537Joe Petrowski has had a long career in international commodity trading, energy and retail management and public policy development. In 2005, he was named President and CEO of Gulf Oil LP and elected to the Gulf Oil LP Board of Directors. In October 2008, he was named CEO of the now combined Gulf Oil and Cumberland Farms, whose annual revenues exceed $11 billion and who now operates in 27 states. In September 2013, Petrowski stepped down as CEO of The Cumberland Gulf Group. He is now the Managing Director of Mercantor Partners, a private equity firm investing in convenience and energy distribution. Joe is also a member of the Gulf, Yesway and Green Print, LLC boards.