By Dr. Jeff Wallace
Over 45.0 percent of total U.S. petroleum refining capacity is located along the coast of the Gulf of Mexico (see: https://www.eia.gov/special/gulf_of_mexico/). Accordingly, it is not surprising that hurricane season brings with it great risks to fuel supplies and, therefore, prices. When hurricanes strike the Gulf region, specifically with regard to gasoline prices, the relevant questions to be answered are how much will prices rise and for how long? As seen in the linked-PowerPoint, we explored this issue in the immediate aftermath of Hurricane Harvey, just as prices were beginning to rise. We show that price impacts of hurricanes are likely to be short lived (less than one month) before prices return to their prior trend levels. As is becoming evident with newer data, gasoline prices have already begun to drift lower towards prior levels (see https://www.gasbudy.com and https://www.eia.gov/petroleum/data.php#prices).