Isaac to increase gas prices in Manatee County

Storm forces Gulf oil platforms to shut down, adding to thin supply

jsalman@bradenton.comAugust 27, 2012 

MANATEE -- As Tropical Storm Isaac continues to churn northwest, fuel analysts predict its impact could lift local prices at pump by 20 cents in a week.

The storm has disrupted the domestic supply, forcing platforms in Gulf of Mexico to shut down at a time when gas prices already are on the climb. Along with an explosion at Venezuela's largest refinery, low inventory has significantly increased wholesale prices.

The exact damage caused to Gulf refineries, and how long those operations will be closed, ultimately will determine how much of the wholesale price hikes will be passed on to Southwest Florida consumers, said Jessica Brady, spokeswoman for AAA Auto Club South.

"A lot of factors are contributing to the prices we're seeing," Brady said. "Isaac certainly has the potential to cause those prices to increase further."

Retail gas prices have been on the rise since early July, when increased sanctions against Iran and the country's threat to block to global oil supply mounted fears among investors. The European debt crisis didn't help either.

But the more recent climb has been attributed to domestic issues, including pipeline leaks, refinery fires and down time from operational maintenance -- all of which have caused the supply to thin.

The average price of a gallon of regular unleaded gasoline in the Bradenton-Sarasota market Monday was $3.75, a 13 cent-jump from a week ago and an increase of 35 cents in the past month. At the same time last year, retail fuel in Bradenton sold for $3.50 a gallon, according to AAA.

Across the Sunshine State, the trend has been similar, with a matching $3.75 statewide average Monday, up from $3.42 last month and $3.56 last year. The national average also

is now $3.75 a gallon.

August is historically a month when fuel prices flirt with their annual high as refineries begin their switch from the more expensive summer blends to winter fuel.

That process ultimately will bring lower prices in the fourth quarter, but the change-over causes a temporary drop in supply, briefly inflating prices some, said Gregg Laskoski, senior petroleum analyst with GasBuddy.com.

He expects prices at the pump to balloon by as much as 20 cents in the coming week alone.

"Certainly as this storm approaches landfall, the potential for increasing gas prices becomes greater," Laskoski said. "Every storm is different, and you never know what to expect. Hopefully these spikes will just be short-term."

Many refineries in the Gulf already have had to temporarily shut down to comply with federal safety regulations.

The farther west the storm shifts, the more refineries that will be impacted.

When hurricanes Gustav and Ike barrelled through the Gulf back-to-back in late August and early September of 2008, it caused gas prices to surge 85 cents in Atlanta. A lot depends on where the local supply originates, Laskoski said.

But don't go stocking up on gas just yet.

An overreaction by consumers could cause prices to increase further by putting more strain on fill-up stations already fighting supply issues.

"It's important for consumers to understand if they're not driving long distances, not to stock up because it exacerbates the situation further," Laskoski said. "Usually people rush to top off a tank that will just sit in the garage."

Area gas stations are selling more fuel because of the storm, but it also has made the market more competitive, squeezing profits, especially on credit card sales.

Since Gov. Rick Scott declared a state of emergency Saturday, fuel retailers must maintain the same profit margins they were charging prior to the storm to prevent price gauging.

"Prices have been rising all month," said Kevin Headlee, owner of the Creekwood Crossing BP station in Bradenton. "Is there going to be an effect with the storm? Yes. Will it be the only factor? No. But prices are going up, and it makes everything more competitive."

Josh Salman, Herald business writer, can be reached at 941-745-7095. Follow him on Twitter @JoshSalman.

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