Harvey may drive up gasoline prices by a double-digit percentage

Updated: Aug. 30, 2017 at 5:07 PM CDT
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NEW ORLEANS, LA (WVUE) - It's an unintended consequence of Hurricane Harvey that will cost drivers far beyond the heart-wrenching destruction being shown around the clock on television.

"Louisiana and Texas produce about half the gasoline. They actually have less than half the total capacity, but we tend to have bigger refineries and they run them harder, so we actually end up producing more than half of the gasoline the country uses," said professor Eric Smith of Tulane University and the Tulane Energy Institute.

The closure of Motiva's refinery in Port Arthur, Texas, due to floodwaters exacerbates the situation. It is the nation's biggest refinery.

"If your physical facilities are fine but you can't get people into the refinery to operate it because the roads are flooded, or you can't get the trucks in because there's too much water on the roads, you might as well not have the refineries running. In our case, we haven't seen any of that yet, but it's certainly impacting Texas and five ports along the Texas coast," said Smith.

"At least in the short term, we're going to see gas prices rising, in some cases dramatically," said Don Redman of AAA in Louisiana.

He said a double-digit increase is possible.

"Overall, anticipating about a 20 percent increase in gasoline prices, at least for the short-term, and short-term we're talking about weeks, and not months, which is about $2.40 a gallon here in Louisiana," Redman said. "It may not reach that, or it may go a little bit higher, but usually those peaks in prices or spikes are short-lived."

FOX 8 surveyed some drivers at the gas pump in New Orleans.

"Everything is going up, insurance is going up, doctor bills going up, everything is going up, but no checks are going up," said Elaine Jones, who stopped to get gasoline for her van.

George Moore was not as worried as he filled up his gas tank.

"I'm not really too concerned, but I think it's going to affect people. The less fortunate people, like, really don't have too much money," said Moore.

"They have some inventory at the refineries…but if you can't get the gasoline and it's rationed, the price will really climb in the short term, and the short-term rise, you would expect them to last maybe three to four weeks," Smith said.

And Redman does not believe that the higher gasoline prices will stop a lot of folks from taking to the road over the Labor Day holiday. In fact, he thinks some will intentionally head to Texas.

"You may also see a lot more people traveling for the holiday, and the fact that they're going to offer aid and rescue or rebuilding of Houston, so I think in our geographical area I don't think it will be a dramatic change. Obviously, in Houston their travel plans have changed dramatically," said Redman.

Moore said he is among those who intend to drive west over the holiday.

"I'm actually trying to go to Texas to help them with the relief, that's what I'm trying to do," said Moore.

A spokesman for Shell Oil told FOX 8 News that operations are normal at Shell Norco, and they are preparing for a heavy rain event.

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