Though Texas is dealing with the brunt of the impact from Hurricane Harvey, the effects of that natural disaster are starting to spread and have been felt locally in regards to one resource in particular — gas.
Like many other markets around Kansas, with a statewide average cost increase from $2.18 to $2.21 per gallon, Harvey County saw a spike in gas prices this week following damage to several oil refineries along the Gulf Coast. According to the Oil Price Information Service, about one-quarter of the oil refining capacity (or 2.5 million barrels per day) is offline following the hurricane, which caused eight refineries in Texas to shut down and forced several others to operate at a reduced rate.
“No doubt, Harvey has impacted operations and access to refineries in the Gulf Coast. However, a clear understanding of overall damage at the refineries is unknown,” said Shawn Steward, AAA Kansas spokesperson. “Despite the country’s overall oil and gasoline inventories being at or above five-year highs, until there is clear picture of damage and an idea when refineries can return to full operational status, gas prices will continue to increase.”
Speculating on just how long that period of increased prices might last, Newell Travel Center General Manager Sharon Bedlington projected it could be months given the volume of work handled by the Texas refineries — and the burden to meet demand that will be passed on to other locations while they remain offline.
Major refineries in the area the Newell Travel Center purchases gasoline from include McPherson, El Dorado, Valley Center and Wichita. Bedlington noted that the travel plaza has its own trucks for transport, meaning it has options when it comes to purchasing, but fuel centers locked into contracts with one refinery may have a tougher time securing gasoline in the aftermath of the hurricane. As demand continues to rise in Texas, the burden of supply will be shifted to refineries outside of that region — including, potentially, those that help supply Kansas.
"The refineries may have it difficult getting supplied because of the demand that Texas is putting (out) because their refineries are down," Bedlington said.
Price increases are not unusual at this time of year, according to Bedlington, who said the annual Labor Day bump may have prepared consumers a little for the spike (though "nobody likes an increase"). Following the impact of the hurricane, though, that increase was a bit greater than expected.
Both AAA and the state government are monitoring the situation to make sure said increases are all within legal limitations and that consumers are not being taken advantage of amidst the fallout from the hurricane.
“As in any national or local state of emergency, AAA expects gas prices to be held in check up and down the gasoline supply chain, including prices set by refiners, distributors and dealers unless there is a clearly justifiable reason for an increase,” Steward said.
“We want to alert Kansans that the Kansas statute prohibiting profiteering from a disaster is in effect as a result of the presidential disaster declaration in the hurricane-stricken region along the Gulf Coast. We are closely monitoring the situation," said Kansas Lt. Gov. Jeff Colyer and Attorney General Derek Schmidt in a joint statement. "While price increases caused by the disruption in supply are to be expected, it is illegal in Kansas to ‘profiteer from a disaster’ by unjustifiably raising the price of motor fuel."
"Under Kansas law, a price increase that exceeds 25 percent compared with the price the day before the disaster is suspect and subject to scrutiny, and a seller that has increased prices by that amount or more may be required to provide documentation that the increase is due to the seller’s increased cost of obtaining the fuel. We encourage caution and restraint so the nation’s focus can remain on assisting those affected along the Gulf Coast.”
Additionally, in an effort to alleviate the anticipated shortage in fuel supplies throughout the region due to Hurricane Harvey, Kansas Secretary of Agriculture Jackie McClaskey signed an order Friday that relaxes enforcement of fuel standards related to the sale and distribution of gasoline through Sept. 30.
Concerns at this point regarding fuel supply are more prevalent in Texas and as long as local citizens continue normal purchasing practices, Bedlington said she doesn't expect the situation to get out of hand.
"I don't think there's a panic in this area. Everybody, I think, is well aware fuel is going to be a little harder to get, but not to the point where we're going to run out," Bedlington said. "I truly believe there's enough fuel for everyone and the fact is we just need to ride it out until that Texas refinery gets up and running and then everything will be back to normal."