Diesel Price Rises; Refinery Closures Cause Uncertainty After Ida
[Stay on top of transportation news: Get TTNews in your inbox.]
The national average price for a gallon of diesel rose 1.5 cents to $3.339, according to Energy Information Administration data released Aug. 30. But that did not include fuel price increases or consider the damage resulting from Hurricane Ida, which shut down refineries and forced the evacuation of offshore oil platforms in the Gulf of Mexico.
The national average price for a gallon of gasoline fell by six-tenths of a cent, sliding from $3.145 to $3.139.
Oil Price Information Service founder and energy analyst Tom Kloza said the hurricane means domestic oil production is expected to drop by at least 2 million barrels a day until the refineries are back online, and in the worst-case scenario, some industry officials are saying that could take several weeks.
Kloza
“It evokes memories of Hurricane Katrina,” he said. “You can’t run a refinery without electricity, and this is one of the great uncertainties. These refineries are going to be down for weeks, maybe two weeks, three weeks, possibly more"
Several refinery operators, including Valero Energy, Marathon Petroleum and Royal Dutch Shell, have crews tabulating the damage and assessing when the facilities can be put back online.
“I think how long it lasts will depend on the restoration of power. None of the refineries sustained major damage, so that’s good news for them,” oil industry analyst Andy Lipow in Houston told Transport Topics. “Several refineries in the Baton Rouge area are beginning their restart operations this week, but those that are west of New Orleans, and some south and east of New Orleans, it’s maybe four weeks.”
It is estimated that Ida impacted at least 2,000 miles of electric transmission lines.
U.S. average on-highway #diesel fuel price on August 30, 2021 was $3.339/gal, UP 1.5¢/gallon from 8/23/21, UP 89.8¢/gallon from year ago https://t.co/YLt95iJV5N #truckers #shippers #fuelprices pic.twitter.com/GNu3spDeDX — EIA (@EIAgov) August 31, 2021
“Diesel may go up a couple of pennies here and there,” Kloza said. “Gasoline will trend up in the geography from Louisiana, north to Tennessee, and all of the East Coast, in part because of very low fuel stocks.
“The East Coast has plenty of diesel, and there is no problem there, but gasoline, especially reformulated gasoline for summer, supplies are tight.”
While many refineries may be down for weeks, Lipow said oil platform workers already are returning to work, even as parts of Louisiana are experiencing fuel shortages. Fuel monitoring service GasBuddy.com reports gas prices rose 6 cents nationally in four days after the hurricane reached land.
Diesel at a Glance
• This week’s increase comes after the price of diesel fell in four of the previous five weeks. The 3.2-cent drop Aug. 23 was the largest since May 3, 2020.a
• A gallon of trucking’s main fuel now costs 89.8 cents more than it did at this time a year ago.
• The price rose in nine of the 10 regions in EIA’s weekly survey, the exception being a 1.1-cent drop in the Rocky Mountain region. The biggest increase was 2.5 cents in the Midwest.
“The price increases are going to be small,” Lipow said. “I’m predicting that in the impacted area, they’ll see prices up 5 to 10 cents a gallon in some of these markets serviced by the New Orleans area refineries. Especially when you compare it to Hurricane Katrina, when retail prices were up 60 cents per gallon and for Hurricane Harvey prices were up 38 cents per gallon in the next week.”
Kloza and Lipow said that because of the COVID-19 pandemic, gasoline demand continues to remain lower than in early 2020 and 2019 as more people still are working at home. Plus, after Labor Day, fewer people take vacations.
Kloza said he is encouraged that the Colonial Pipeline, which is a critical transporter of gasoline, diesel and jet fuel from Houston to the Port of New York and New Jersey, quickly restored operations after shutting down during the hurricane. The Alpharetta, Ga.-based energy company resumed operations Aug. 30.
The #OneColonial team did a fantastic job last night! Main lines are back up and running. https://t.co/bUn4Kd5qWB — Colonial Pipeline (@Colpipe) August 31, 2021
“After receiving clearance to enter the impacted areas, the crews followed rigorous procedures to inspect the infrastructure for integrity and completed all restart protocols,” Colonial said in a statement.
The company also restored operations on two additional lines that run fuel from Houston to Greensboro, N.C., which had been taken offline as a precaution with Ida bearing down on the Gulf of Mexico.
To ease gasoline supplies in parts of the Southeast, Louisiana and Mississippi have been granted approval by the Environmental Protection Agency to begin using winter-blend gasoline, which the agency says will reduce fuel supply shortages caused by the hurricane.
“The fuel supply shortages caused by Ida can be reduced by waiving the requirements to sell low-volatility gasoline,” EPA Administrator Michael Regan said Aug. 31 in a letter approving waivers.
U.S. On-Highway Diesel Fuel Prices
EIA.gov
Want more news? Listen to today's daily briefing below or go here for more info:
