Gas prices rise in wake of refinery attack
By Tyler Stocks
Tuesday, September 17, 2019
An attack on an oil refinery in Saudi Arabia likely will raise gas prices by as much as 30 cents a gallon at the pump, an expert in gas prices said Monday.
Patrick DeHaan, head of petroleum analysis for Gasbuddy, said the Saturday attack that heavily damaged Abqaiq refinery is significantly reducing oil and gas supplies. Gas prices will increase in small increments over the next several weeks as a result, DeHaan said.
Gasbuddy is a Boston tech company that operates apps and websites based on finding real-time fuel prices at more than 140,000 gas stations in the United States, Canada, and Australia.
"U.S. motorists are going to be seeing gas prices that move up in the next 24-48 hours lasting perhaps for several weeks," DeHaan said. "The increase I see coming as a result of this would be somewhere in the neighborhood of 15 to 30 cents a gallon."
In Greenville, prices on Monday afternoon were $2.32 at Speedway locations and $2.45 a gallon at multiple Sheetz locations.
For most people, gas prices are already high enough and even a slight increase in the price will make it harder for them to make ends meet.
"Honestly, I think it's too high to start with," George Bateman of Greenville said.
Bateman filled up at the Speedway on U.S. 264 Alternate near Martin Luther King Jr. Parkway.
"They're going to do what they're going to do. I think it's outrageous what we're paying for it to start with. Gas prices continue to climb, payrolls haven't. Even the people working in the refineries, their pay has not gone up by margins that the price of gas has gone up. And I don't have a problem with anybody making money but what extent do you call enough, enough?"
At the Sheetz on North Memorial Drive, Matthew Smith of Greenville was unfamiliar with Saturday's attack but said prices could be better regardless.
Kevin Reid who lives in Pitt County also was filling up and said higher prices will affect people in their ability to get around.
"It's going to affect everybody really because you ain't going to be able go where you need to go," Reid said.
Since the refinery was attacked, gasoline has traded 12.5 percent higher while oil has traded as high as 14 percent, DeHaan said.
"Every day prices will start to inch higher and by two weeks from today, we will be 15 to 30 cents higher than where we are today. It certainly could become worse than that," DeHaan said.
The markets are expected to stabilize, however, and Saudi Arabia should be able to compensate for its lost capacity at Abqaig, which DeHaan said is about 5 percent of its total output.
"Markets are expecting that Saudi Arabia will be able to restore its production relatively quickly," DeHaan said.
The disruption is something that is unprecedented, he said.
"They are the third-largest oil producer in the world so this is significant. We've never seen something like this happen in Saudi Arabia and suddenly, we are without 5 percent of global production that we had expected to be there. It's a major tilt in the delicate balance of supply and demand," DeHaan said.
To assuage concerns of a possible gas shortage, President Donald Trump said he is ready to tap into the U.S. Strategic Petroleum Reserves, which DeHaan said is a series of caverns in Louisiana that hold over 650 million barrels of oil.
DeHaan said that move has helped keep market prices under control.
"The statement that the White House issued offering up oil from the SPR is significant. It likely does more from a psychological standpoint of limiting the damage in terms of oil prices simply because it acts as an insurance policy against a major disruption," DeHaan said.
The reserve is not necessarily oil that we need at this moment, but it "is a lever that the president can utilize to keep oil prices from rising further on the concern that the disruption would last a longer period of time," DeHaan said.
For now, DeHaan advised consumers to shop around for the best prices and not panic as prices will taper off after a few weeks.
"This is not going to lead to shortages. It would take quite some time for that to happen. This is going to be a pricing event. I do not expect any stations to run out of fuel. We're not at that point. Just be prepared for an increase to prices and shop around," DeHaan said.