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Hurricane Ida will likely send gas prices higher this week

​Many Gulf Coast refineries shut down as the major storm approached

Photo (c) 1001 Nights - Getty Images
Hurricane Ida slammed New Orleans as it roared ashore Sunday, and motorists in many parts of the nation will feel the impact at the gas pump this week.

Gulf Coast refineries from Louisiana to Texas shut down operations in advance of the storm to limit the damage. The Colonial Pipeline, which moves gasoline from those refineries to wide areas of the eastern U.S., was also shut down as a precaution.

The company reported on Twitter that it had temporarily shut down its Lines 1 and 2 systems from Houston to Greensboro, N.C. Colonial said the rest of the network from North Carolina to New Jersey would continue to operate normally.

Gas prices likely to rise

The move will almost certainly increase the price of gasoline -- more in some areas than others. Patrick DeHaan, head of Petroleum Analysis at GasBuddy, was busy on Twitter overnight, posting his estimates for the cost of fuel.

DeHaan said there is a 75% chance that the national price of gasoline will rise five cents a gallon over the next couple of weeks; he said there was a 60% chance of a 10 cent increase. The AAA Fuel Gauge Survey already showed a one-cent per gallon increase by Monday morning, reversing a trend that had pushed prices lower by three cents a gallon during the previous week.

“Keeping in mind the storm hasn't cleared the area and storm assessments could change this, I still feel pretty confident in these figures,” DeHaan wrote. “Again, Hurricane Ida isn't likely to lead to drastic price increases, but some increases are likely over the next two weeks.”

The movement of fuel has stopped

The Colonial Pipeline shutdown is expected to be temporary, but even a brief interruption in the flow of fuel is likely to have some impact on prices. The pipeline supplies nearly half the fuel for East Coast markets.

Pipeline executives have not provided a date to resume operations, saying only that the fuel will flow again when it is safe to do so. In mid-May Colonial’s main pipeline was shut down by a ransomware attack that sent gasoline prices sharply higher.

Retail gasoline prices may also be further affected by a reduction in refinery production. Major refineries suspended an estimated 95% of their production Sunday as the storm approached the Gulf Coast.

The storm, which hit New Orleans on the 16th anniversary of Hurricane Katrina, caused widespread property damage and knocked out power to most of the city. However, the city escaped the devastating flooding caused by Hurricane Katrina.

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