Despite the wretched weather Hurricane Sandy is spawning in the
northeast USA, lower gas prices still are likely in the forecast.
Unlike
Hurricane Isaac, which led to an uptick in prices as it moved through
the Gulf of Mexico in August and affected refineries there, Sandy will
likely have a more muted effect on the market, experts say.
"We have been on a steady road toward cheaper gas
prices nationwide. The storm could mean a small wobble to the upside for
a few days, but I suspect prices will resume their downward trend,"
said Tom Kloza, chief analyst at Oil Price Information Systems.
The
Mid-Atlantic and Northeast, where Sandy is striking, is more of a
gasoline consumer than a gasoline producer, says AAA spokesman Avery
Ash.
"I wouldn't be surprised over the next day or two to see the
average price in some Northeastern states move a little bit higher.
However, these are likely to be blips on the radar screen," Ash says.
"Once refineries come back online and distribution issues are worked
out, we anticipate prices returning to their decline."
Gas prices are expected to continue to drop leading to Election Day and continue to fall through the end of the year, Ash says.
Monday's
national average for a gallon of regular unleaded was $3.543, down a
half-penny from Sunday and down 13 cents from a week ago, according to
AAA's daily Fuel Gauge Report. The average has dropped for 18
consecutive days.
Refineries in New York harbor, Philadelphia and
Delaware scaled back or shut down Monday because of worries about storm
damage and in anticipation of reduced demand.
Although some
filling stations along the East Coast reported being out of gas, those
reports were isolated and not expected to become the norm.
"The
mistake somebody might make would be to leap to conclusions and say
they're running out of gas, but the reality is that the gas just hasn't
been moved from Point A to Point B," Kloza says. "If you went out today
to buy bottled water or batteries, you probably wouldn't be able to find
any in the stores. But that doesn't mean that there aren't any."
Tankers
and barges haven't been able to bring supplies to New England from
elsewhere in the country since about 6 p.m. Sunday, Kloza says. He added
that if the storm significantly damages refineries in the Northeast,
the impact on markets should be reassessed.
Demand for gas is
expected to drop dramatically as tens of thousands of Americans stay
home to ride out the storm. Oil prices fell when it appeared Sandy would
keep motorists off the road and shut businesses, leading to a reduction
in demand.
"This could be the biggest demand destruction event
in history," Phil Flynn, a senior market analyst for Price Futures
Group, wrote in a report Monday. "The impact on demand may not last for
hours but more than likely for days."
Crude oil prices fell 74
cents, or 1.3%, to finish at $85.54 a barrel in trading on the New York
Mercantile Exchange. The Nymex was closed Monday because of the storm
and evacuations in New York, but electronic trading continued.
Monday's drop continued a decline in oil prices that began after oil prices reached about $100 a barrel in mid-September.
"Hurricanes always destroy demand. They rarely destroy supply beyond a few days," Kloza says.
USA Today