Harvey, Labor Day Fuel Increases in Pump Prices

Oregon isolated from major storm impact

PORTLAND, Ore., – As Harvey continues to blast Texas and the Gulf Coast with heavy rains, inflicting some of the worst flooding in history in the Houston area, gas prices are climbing in many parts of the country. Reduced fuel supplies due to the storm, along with the expected increase in demand due to the Labor Day weekend are putting upward pressure on pump prices. For the week, the national average for regular unleaded adds four cents to $2.38. This is one of the largest one-week price surges for the national average seen this summer. The Oregon average gains two-and-a-half cents to $2.84.

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“Pump prices in Oregon and the West Coast aren’t seeing significant increases in gas prices due to Harvey since we don’t depend on the Gulf Coast for our gasoline. Price spikes aren’t expected in Oregon because pump prices here already climbed due to significant demand surrounding the August 21 eclipse. However it’s reasonable to expect prices to increase a few cents more leading up to the Labor Day weekend,” says AAA Oregon/Idaho Public Affairs Director Marie Dodds.

 

AAA says Harvey could have a greater impact on gas prices in the Gulf Coast and the Midwest. The unprecedented flooding has impacted operations and access to refineries in the Gulf Coast and Texas. When the water recedes, damage to refineries could cause ripple effects across the country. Pump prices are already expected to climb leading up to the Labor Day weekend and supply disruptions due to Harvey could cause additional price surges, sending the national average to $2.50 a gallon.

 

Prices in all 50 states and the District of Columbia increased in the last week. The largest jumps are in Ohio (+9 cents) and Georgia (+8 cents). Texas has the fifth largest weekly increase at 6 cents.

 

Oregon has the third-largest monthly increase in the nation and is one of 48 states and the District of Columbia to see pump prices rise in the last month. The largest monthly increases are in Idaho (+23 cents), Utah (+18 cents) and Oregon (+18 cents). Michigan and Indiana are the only states where prices fell in the last month and both decreases are two cents or less. The national average is seven cents more and the Oregon average is 18 cents more than a month ago.

Rank Region Price on 8/29/2017
1 Hawaii $3.08
2 California $3.00
3 Washington $2.95
4 Alaska $2.87
5 Oregon $2.84
6 Idaho $2.75
7 Nevada $2.67
8 District of Columbia $2.62
9 Utah $2.61
10 Pennsylvania $2.55

The West Coast continues to have the most expensive pump prices in the nation. This week Hawaii is joined by California as the only two states in the nation with averages at or above $3. Washington, Alaska, Oregon, Idaho and Nevada round out the top seven most expensive states. Oregon is fifth most expensive for the ninth week in a row.

 

West Coast gasoline inventories took a 500,000 bbl draw on the week, which is largely attributed to last week’s heavy tourism in the Pacific Northwest tied to the eclipse. The draw brings the inventory levels to 26.1 million bbl, which is the lowest level seen in the region this year.

 

The nation’s cheapest markets are Mississippi ($2.13) and Alabama ($2.13). For the fifth week in a row, no states have an average below $2.

 

Drivers are paying more to fill up compared to one year ago. The national average is currently 16 cents per gallon more and the Oregon average is 38 cents more than a year ago.

 

Labor Day Travel

 

Labor Day is seen as the final chance for a long weekend getaway before the summer comes to an end and generally sees the lowest travel volume of the three major summer holiday weekends. Over the last decade, travel over the Labor Day holiday weekend has remained relatively stable, with approximately 35 million Americans traveling 50 miles or more from home each year. In the Pacific Region (AK, CA, HI, OR, WA), about 5 million people typically travel.  This compares to 39 million Memorial Day and 44 million Independence Day travelers this year (6.5 million and 6.8 million in the Pacific Region, respectively).

Labor Day Gas Prices

The date of the Labor Day holiday can impact travel volume. Observed on the first Monday in September, Labor Day can fall anywhere from September 1 through 7. When the holiday falls earlier in September, more travel tends to take place.  This year, Labor Day is September 4. Many schools have already started classes which can mean that families plan shorter trips that are closer to home. Regional destinations such as Central Oregon, the Oregon Coast, Ashland and Crater Lake are favorites.

 

Airfare tends to be a bit lower in late August and early September than during the heart of the summer, so some families choose to visit Disneyland, Legoland or one of the other theme parks in Southern California.

 

Oil Market Dynamics

 

It is still too soon for the market to know how badly damaged energy infrastructure is from Harvey but the coming days will offer more insight into how long recovery and restoration may take. Demand shifts based on the storm and countermeasures the market will take to meet a new supply and demand landscape will also be evaluated.

 

At the end of last week, the price per barrel of West Texas Intermediate remained below $50. On Monday morning, prices began to fall as news of refinery closings due to Tropical Storm Harvey began to influence the market. Refinery closings signal that less oil will likely be consumed as catastrophic flooding persists in the region, and assessments of damage to energy infrastructure assets are stalled until conditions improve. All of this uncertainty has made the market jittery.

 

Data released last week by the U.S. Energy Information Administration shows that crude oil inventories dropped by an additional 3.3 million bbl. The continued decline in crude oil has been largely tied to strong refining operations as gross inputs refineries across the U.S. have topped 17 million b/d every week going back to mid-April. However, this trend could change due to refinery closures and reduced operations due to Harvey. As the emergency situation evolves, refiners in other regions, additional imports and alternative transportation routes may be needed to fill any gaps in meeting demand during the aftermath of the storm – all of which could tighten supply and add extra costs to getting gasoline to the pump.

 

Moreover, according to Baker Hughes, Inc., active oil rigs are down by four, standing at 759 as of last week. Fewer active rigs — coupled with crude oil output being currently reduced by more than 21 percent in the Gulf of Mexico due to the storm — could be a recipe for oil prices to jump throughout the week. However, any price jumps will be linked with matching demand estimates, which could signal a dramatic decline based on the storm.

 

At the close of Friday’s formal trading session on the NYMEX, WTI increased 44 cents to settle at $47.87. At the close of Monday’s session, WTI lost $1.30 to settle at $46.57, the lowest settlement since July 24. Today crude is trading around $46, compared to $48 a week ago. Crude prices are down about seven percent in the last month and are about $1 per barrel lower than a year ago.

 

Drivers can find current gas prices along their route with the free AAA Mobile app for iPhone, iPad and Android. The app can also be used to map a route, find discounts, book a hotel and access AAA roadside assistance. Learn more at AAA.com/mobile.

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Diesel

Diesel prices are moving up. For the week, the national average adds a penny to $2.54 a gallon. Oregon’s average rises two cents to $2.80. A year ago the national average for diesel was $2.36 and the Oregon average was $2.55.

Find current fuel prices at GasPrices.AAA.com.

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