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Suppliers, U.S. government work to increase gasoline supply in Southeast

Staff Reports • Updated Sep 2, 2017 at 9:00 AM

A combination refinery and pipeline shut downs, tightened access to supply levels in the Gulf and anticipated high gasoline demand surrounding Labor Day weekend pushed the national average for a gallon of unleaded gasoline to $2.45 Friday, surpassing the 2017 high set April 20. 

Motorists should expect gas prices to rise another 5-10 cents in the near-term, however, a number of developments today could ease concerns of tight supply in the Southeast.

“Northeast refiners are barging supplies to the Southeast and today the U.S. Department of Energy released crude from the U.S. Strategic Petroleum Reserve to offset the lack of supply from the Gulf Coast as 10 refineries remain offline due to Harvey,” Stephanie Milani, Tennessee public affairs director for AAA, said Friday. 

Additionally on Wednesday, the Environmental Protection Agency issued a waiver requirement for low-volatility conventional gasoline and reformulated gasoline in Alabama, Florida, Georgia, Kentucky, Maryland, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, Texas, Louisiana and the District of Columbia. With the waiver, retailers in the aforementioned states are allowed to sell “winter blend” gasoline early.

“Even with these measures, consumers should expect to see the highest Labor Day prices at the pump since 2014,” said Milani. “We anticipate the national average to top $2.50 per gallon. On the positive side, once refineries are back to full operation, we should expect to see gas prices fall toward the end of September.”

Corpus Christi, Texas refineries are working to come back online, and Houston and Galveston are beginning to dry out. The next few days will offer more insight into how long total recovery and restoration efforts may take.

Harvey has set a record for the greatest amount of single-storm rainfall for the continental U.S. Through Friday, the storm continued to threaten heavy rain to parts of Louisiana and eastern Texas with 3-6 inches and even move into western Kentucky with 10 inches of rain. In the Houston and Galveston areas, flooding, not rain, is now the concern.

“The storm has had a devastating effect on the lives of so many,” said Kevin Bakewell, vice president of corporate public affairs for AAA. “Our thoughts are with all of those impacted by this storm. Like many organizations we are providing corporate financial support to assist those in the region and encouraging our employees to do the same.”

As of Wednesday evening, the Department of Energy reported 10 Gulf Coast refineries remain shut down. Six refineries have begun the process of assessing damage and restarting, which may take several days. Two refineries in the Gulf Coast region are operating at reduced rates. Refineries in Lake Charles, Louisiana, were threatened as Harvey moved east.

The DOE released 500,000 barrels of oil from the U.S. Strategic Petroleum Reserve – the nation’s reserve of crude oil. The oil will be delivered via pipeline to the Phillips 66 refinery in Westlake, Louisiana. According to DOE, it will continue to review incoming requests for oil in the reserve, meaning it could release more if deemed necessary.

The Colonial Pipeline announced Wednesday evening it expects to temporarily suspend its gasoline, diesel and jet fuel pipelines. With its supplying refineries closed in the area, the pipeline operator cited reduced output as the reason for suspending its transportation operations. The pipeline originates in Houston and supplies the East Coast.

“The shut downs do not indicate a shortage of gasoline supplies in the Gulf Coast region or across the country,” said Milani. “Overall stocks in the Gulf are above-average levels and will be available to drivers once power is restored and area roads are cleared.”

Since Friday when Harvey came ashore in Texas, gas prices increased 12 cents in Tennessee. The average price for a gallon of regular unleaded gasoline in Tennessee stood Friday at $2.26. The average is the highest since Aug. 22, 2015.

The metro areas with the lowest gas prices in the state were Johnson City at $2.20, Chattanooga at $2.21 and Knoxville at $2.22. The most expensive markets for gas prices in the state were Nashville at $2.30, Memphis at $2.26 and Clarksville at $2.24.

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