Gas prices could climb well above their current near-record levels to “apocalyptic” heights if hurricane season results in significant disruptions for US oil refiners, an industry expert warned Friday.
The national average gas price was hovering at roughly $4.93 as of Friday or about nine cents lower than its all-time high reached on June 14. Oil prices have also ticked slightly lower, holding at about $107 per barrel after trading near $120 earlier in the month.
But positive trends and efforts to lower prices could be “overwhelmed if we have an active tropical season” that impacts domestic refining efforts in the Gulf of Mexico, OPIS energy analysis global head Tom Kloza told Fox Business Network on Friday.
“I think for gasoline, we go back above $5 and apocalyptic numbers come into play with hurricanes,” Kloza said. “The thing that people have to watch and is really insidious for inflation are the values for diesel and jet fuel. Stocks of those fuels are not building, they’re tight internationally and that’s where we’re going to have to pay the piper in the last 100 days of the year.”
Hurricanes in the Gulf can shut down production and lead to higher gas prices in what would be a particularly damaging outcome given the chaotic state of the global energy market. In 2017, US gas prices hit two-year highs after Hurricane Harvey impacted fuel production and shipments.
Gas prices are closely tied to the cost of oil, which has moved steadily higher in recent months due to pandemic-related supply chain disruptions, surging demand and the Russian invasion of Ukraine.
Kloza warned that the month of July would be a crucial period for gas price trends.
“July, without question, is the highest demand month,” Kloza added. “In July and August, we really have to cross our fingers that no refining infrastructure gets damaged by hurricanes or by the electric grid, which seems to be not incredibly stable in parts of the Gulf Coast.”
Aside from the sticker shock experienced by American motorists, the higher fuel costs have hammered US airlines and other sectors of the economy during a period of decades-high inflation.
The Biden administration is scrambling to find a way to bring down gas prices. Critics have argued that some of Biden’s energy policies have contributed to the problem.
Biden has urged US oil companies to increase production and called for the implementation of a three-month federal gas tax “holiday” — a proposal that was met with a muted response from other top Democrats.