Gas prices in the Dan River Region and around the country spiked by more than just a few pennies this week following Hurricane Harvey’s path of destruction in the Texas Gulf Coast, but experts and local gas station owners say the effects on the pump will most likely be a short-term problem.
“There’s a tendency for markets to overreact and expect the worst, and I think that’s what’s were in this week,” said George Hoffer, an economics instructor at the University of Richmond specializing in transportation economics.
In Danville, prices ranged from $2.14 to $2.29 a gallon on Thursday at gas stations along Riverside Drive. At the Exxon station on West Main Street, owner John Murphy said his prices had gone up about 14 cents to $2.29 since the beginning of the week.
However, Murphy said he didn’t think the price increase would last more than a week or two.
“I think it’s going to be short term,” Murphy said.
Gas prices surged to $2.40 a gallon nationally on Wednesday, and could climb as high as $2.50, according to information from AAA. In Virginia, prices rose to $2.19 per gallon. Several gas refineries in the gulf are still down because of Harvey, and the full extent of damage to them isn’t known.
AAA Mid Atlantic Manager for Public and Government Affairs Martha Meade said several factors could send prices up further. As Harvey clears out of the gulf, Meade said refinery operators will need to figure out the extent of the damage to operations, as well as whether it is safe for workers to return.
“If there is no damage to refineries and workers can get to them in a week, we expect gas prices to go up about 25 cents in a week,” Meade said.
The Colonial Pipeline, which supplies about 40 percent of the fuel to the East Coast, also shut down early Thursday due to the storm.
However, Meade noted that the United States currently has the highest gasoline reserves in five years, at 100 million barrels.
“That means that for now, it should be an adequate supply of gasoline that can be moved around the country to meet demand,” Meade said.
Danville City Manager Ken Larking said he was confident the price increase would most likely not affect the way Danville fuels its municipal buses and other city vehicles, unless it became a long-term issue.
“We always top off our fuel supplies in anticipation of events like these,” Larking said.
Additionally, the city buys in bulk from a contract, which allows them to buy at a lower price than other customers.
Hoffer, who has been teaching for more than 40 years, said other factors both large and small in scope could fight off the financial effects of Harvey on the petroleum market. For example, worldwide petroleum production is at its historical peak, and next Monday will mark the historical end of the summer travel season.
Further driving down the costs is that gas stations in urban areas will not have to oxygenate gas as the season ends, a federally-mandated practice meant to cut the carbon monoxide emissions that cars tend to spew out more in cold weather.
“You get this odd thing happening in gas prices where while supply has gone done, the demand in the fuel-intensive cities in the country has also gone down,” Hoffer said.
Some retailers might try to price gouge in the coming weeks, Hoffer warned. He then noted that consumers remember which retailers do this.
“People are most cognizant of gasoline prices than any other expense,” he said.
His advice for motorists was to not panic, and to try to ride out the short-term disruption.