JACKSONVILLE, Fla. -- Floodwaters aren't the only thing that's been slow to recede since Hurricane Irma blasted the First Coast. Gas prices, like rivers and tides, swelled because of the storm and have been slow returning to their previous levels.
“I think it’s a little wrong," Gloria Brown of Jacksonville told first Coast News Friday while topping off her tank at the British Petroleum station on Emerson Road.
She's not alone in suggesting a greedy oil industry profiteering from the storm.
“They just take advantage of the opportunity to charge more," said customer Lance Doyle at a nearby Gate Petroleum mart.
Senior analyst Patrick DeHaan at GasBuddy.com talked with First Coast News by phone Friday, saying the average price of a regular gallon of gas in Jacksonville before tropical storm Harvey hit Texas in August was $2.27. As Irma drew near, the average had jumped all the way to $2.70, and has only ebbed to $2.67 in the nearly two weeks since Irma passed.
DeHaan explained that there are multiple reasons for the slow price pullback, one of which has been a gradual return to production at refineries on the Texas coast. In fact, he said, at the peak of the storm crisis, the Americans were consuming 84 million more gallons each day than was being produced. Given that much of Florida's petroleum comes from Texas, bridging the gap between supply and demand - and with it lower prices - has been slow in the Sunshine State.
DeHaan said we're also paying on the back end for what were inconspicuously depressed prices - at least momentarily before and during the storms - that actually benefited some consumers, even if they weren't aware of it.
"It’s very difficult for retailers to fully raise prices as fast as they are facing those higher prices," DeHaan said. "because the competition down the street may not have to buy gas at that higher price, so they may not raise their price."
What he means is, if one gas station runs dry and needs a delivery, it might have to absorb a sudden spike in wholesale prices. If other stations nearby still have reserves, they don't need to pay the suddenly higher delivery amount. The station paying for the delivery now has to keep its prices even with competition despite having just paid a steeper per-gallon amount. DeHaan said that can mean temporary artificially delayed price hikes for customers before and during a storm.
"For those three to four days, stations were in a pinch," he explained. "And many of them may have seen negative margins, meaning that they were selling gasoline at a loss.”
Those losses, DeHaan said, take time to make up. He also suggested that price increases in Florida were especially sharp because of a unique double-whammy on just the supply side alone. The first half of it was the curtailment of production in Texas because of Harvey. The second was - and is - Florida's lack of pipeline infrastructure, forcing the state to typically receive 97 percent of its gasoline inventories by sea. When Irma arrived, shipments no longer could.
"On a bad day, when there’s a hurricane that shuts almost every port across the state of Florida, then things can unravel very quickly," DeHaan said. "In fact, I don’t think any other state in the country receives as much gasoline via barge or ship, as Florida does.”
Of course, as millions of Floridians stocked up, evacuated, or both, demand pushed prices up even more sharply. Still, all the explanation in the world doesn't erase cynicism.
"A month or two, right before the holidays," one customer predicted when asked when gas prices might come back down. "And then it’s just going to go right back up again.”
DeHaan said crude oil prices overall are a bit higher than before Harvey a month ago, but that, barring any storms or other disturbances in the near future, prices will indeed come back to near pre-storm levels. It just might take a few more weeks.
"We will see the downward momentum accelerate as stations continue to fill up with cheaper fuel," he assured. "They’ll continue to pass those lower prices along.”
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