Keep an eye on this (per Bloomberg):
Gasoline premiums to futures widened to records in the Gulf Coast and New York Harbor markets as Texas refineries shut because of Hurricane Ike.
Gulf Coast, 87-grade conventional gasoline’s premium to New York Mercantile Exchange futures gained $1.495 to $1.995 a gallon at 2:30 p.m. New York time, the widest since at least 1991, according to data compiled by Bloomberg. The price for prompt delivery rose $1.5882 to $4.7498 a gallon, the highest since at least 1971.
Refineries including Exxon Mobil Corp.’s in Baytown and plants in Texas City run by BP Plc and Valero Energy Corp. are closing because of Ike, a Category 2 Hurricane now in the Gulf of Mexico. The Texas coast contains more than a quarter of U.S. refining capacity.
“At this point we just don’t know how long these refineries will be down and to what extent they will be damaged,” said Bruce Bullock, director of the Maguire Energy Institute at Southern Methodist University. “The potential damage to the refinery infrastructure appears to be of more concern than damage to the production facilities offshore.”
If production is shut down and prices spike, the Locker Room illustrated a strategy of navigating a short-term, hurricane-related price spike back in 2005. Watch it unfold:
- Aug. 29: rumors of an overnight price spike
- Aug. 30: there was no morning spike, but by lunchtime steady increases were noticeable, on into the evening
- Aug. 31: there was a wide disparity in pump prices as the spike began in earnest, which continued into the evening
- Sep. 1: Prices begin to settle
- Sep. 2: Prices reach their apex
- Sep. 16: Review, discussion, and short-term price-spike management offered here
For the record, I filled up my gas tank tonight.
