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Ample supply should counter climbing fuel prices after Hurricane Laura, unless consumers intervene

Cars travel past a sign that shows fuel prices at a station on Memorial Road in Oklahoma City Thursday. [Bryan Terry/The Oklahoman]
Cars travel past a sign that shows fuel prices at a station on Memorial Road in Oklahoma City Thursday. [Bryan Terry/The Oklahoman]

Wholesale gasoline prices climbed slightly before Hurricane Laura roared ashore at the Louisiana-Texas state line Thursday morning.

But because there was an ample supply of gasoline being stored before the storm forced several major refiners to shutter their operations, the biggest impact on fuel prices could be consumer behavior during the next several weeks.

Consumers have behaved in a fickle fashion since the coronavirus pandemic arrived in the U.S. in March, analysts and economists pointed out.

First, they bought up supplies of toilet paper, paper towels and disinfection products, cleaning off store shelves more quickly than they could be resupplied and creating a shortage that lasted weeks for some products and months for others.

Since then, they’ve made periodic runs on meats, dairy products and fresh produce as pandemic conditions caused supply chain disruptions for those.

Could gasoline be next?

“It will depend on speculative behavior on your everyday consumers,” said Travis Roach, an associate professor of economics at the University of Central Oklahoma who is the director of the school’s Central Policy Institute. “Are people in Houston, Austin and Dallas going to panic buy, worried there won’t be enough fuel in coming weeks? That could cause some shortages that might create some shortages up here and prompt people here to do the same thing. The thing that is interesting to me is that people are driving less in general because of the pandemic.

“So, maybe some of this price behavior we have seen in the past will be more muted because of that trend," Roach said.

For now, prices only slightly climbed in some parts of the nation, said Leslie Gamble, a spokeswoman for AAA Oklahoma. The company's site, gasprices.aaa.com, showed the average price for a gallon of gasoline in Oklahoma on Thursday was about $1.93 a gallon.

“There has not been a run that we would commonly see before a major hurricane would strike the Gulf Coast,” Gamble said, “and demand has been significantly down since March, and that is something we hadn’t seen with these earlier storms. Oil and gasoline stocks are high right now.”

Sarp Ozkan, Enverus’ director of energy analysis, said Thursday that refineries drew 4.7 million barrels of crude oil out of storage last week.

However, Ozkan noted that distillate fuel inventories grew by 1.4 million barrels week over week and that total inventories of distillate fuel for the week were 24% greater than average storage levels over the past five years. As for gasoline specifically, its available supply Wednesday was still 5% higher than its five year average, even accounting for withdrawals made by suppliers this week.

Plus, demand remains muted, with agency records reflecting the total amount of products supplied over the previous month 14.6% lower than what had been seen in 2019.

“The Port Arthur, Beaumont and Lake Charles refining capacity is what had to be taken off line, and while there is no estimate on damage as yet, we will wait and see because that 3 million barrels per day of capacity will impact prices if it remains offline long enough,” Ozkan said. “So, this time around, I would expect that even a months-long outage for refiners would have a negligible impact on gasoline prices because of the overhang in stock and lagging demand.”

Related Photos
<strong>A pump displays gas prices at an Oklahoma City station on Thursday. [Chris Landsberger/The Oklahoman]</strong>

A pump displays gas prices at an Oklahoma City station on Thursday. [Chris Landsberger/The Oklahoman]

<figure><img src="//cdn2.newsok.biz/cache/r960-1b9de181e5a1bf289c9929d08663f9e0.jpg" alt="Photo - A pump displays gas prices at an Oklahoma City station on Thursday. [Chris Landsberger/The Oklahoman] " title=" A pump displays gas prices at an Oklahoma City station on Thursday. [Chris Landsberger/The Oklahoman] "><figcaption> A pump displays gas prices at an Oklahoma City station on Thursday. [Chris Landsberger/The Oklahoman] </figcaption></figure><figure><img src="//cdn2.newsok.biz/cache/r960-16a1db6f8e068f503e80332ca1a5d3ac.jpg" alt="Photo - Fuel prices vary depending on the seller and location. [Chris Landsberger/The Oklahoman] " title=" Fuel prices vary depending on the seller and location. [Chris Landsberger/The Oklahoman] "><figcaption> Fuel prices vary depending on the seller and location. [Chris Landsberger/The Oklahoman] </figcaption></figure><figure><img src="//cdn2.newsok.biz/cache/r960-9e1fc617d29eea19a51297c47da75887.jpg" alt="Photo - A fuel retailer's sign in Oklahoma City on Thursday. [Chris Landsberger/The Oklahoman] " title=" A fuel retailer's sign in Oklahoma City on Thursday. [Chris Landsberger/The Oklahoman] "><figcaption> A fuel retailer's sign in Oklahoma City on Thursday. [Chris Landsberger/The Oklahoman] </figcaption></figure><figure><img src="//cdn2.newsok.biz/cache/r960-382047e91154eccc7f3816e4fb52e93b.jpg" alt="Photo - Cars travel past a sign that shows fuel prices at a station on Memorial Road in Oklahoma City Thursday. [Bryan Terry/The Oklahoman] " title=" Cars travel past a sign that shows fuel prices at a station on Memorial Road in Oklahoma City Thursday. [Bryan Terry/The Oklahoman] "><figcaption> Cars travel past a sign that shows fuel prices at a station on Memorial Road in Oklahoma City Thursday. [Bryan Terry/The Oklahoman] </figcaption></figure>
Jack Money

Jack Money has worked for The Oklahoman for more than 20 years. During that time, he has worked for the paper’s city, state, metro and business news desks, including serving for a while as an assistant city editor. Money has won state and regional... Read more ›

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