Some would label it an energy crisis, as analysts expect higher prices for gasoline over the Labor Day weekend, as Hurricane Isaac affected the production of companies in the oil and gas industry in the Gulf Coast.
Several oil companies in the Gulf Coast closed their refineries, or reduced the volume of their oil and natural gas production. A report from Bloomberg cited estimates from the Bureau of Safety and Environmental Enforcement that companies reduced the production of oil and natural gas in the area by 95 percent and 73 percent respectively
According to the report, some of the oil companies in the Gulf Coast such as Royal Dutch Shell Plc (NYSE:RDS.A) (RDS.B) and Anadarko Petroleum Corp. (NYSE:APC) plans to restart their operations today. BP Plc (NYSE:BP) and Chevron Corp. (NYSE:CVX) are checking their off shore facilities for damages before resuming their oil and gas production. Exxon Mobil (NYSE:XOM)’s started its normal operations in its Baton Rouge refinery and Chalmette plant in Louisiana.
Patrick DeHaan, senior petroleum analyst at GasBuddy.com said average motorists might pay a bit more for gas this coming Labor Day weekend. According to him, the national average price of gasoline is $3.80 per gallon, which is 18 cents higher than the national average last year. Yesterday, some cities have more than $4 per gallon average price such as New York City at $4.06, Los Angeles at $4.15, and Chicago $4.35.
DeHaan said, “Although the end of summer driving season usually sends retail gas prices downward, they’ve got a long way to go before prices fall back to ‘tolerable’. While Tropical Storm Isaac begins to weaken, there are still enough upset motorists to think this was a category five storm.”
AAA expects 33 million Americans to travel more than 50 miles during the Labor Day weekend, 2.9 percent higher than last year. Mary Maguire, spokesperson of AAA in Southern New England opined that many families are thinking twice before taking a trip this coming holiday because of the increasing price of gasoline.
According to Chris G. Christopher Jr., economist at Lexington forecasting firm, gas prices will increase if Hurricane Isaac left a lot of damage or if a conflict breaks out in the Middle East.
On the other hand, 29 analysts surveyed by Bloomberg believe gas prices will go down, 8 projected a price increase and 4 analyst believe changes in price will be small through September 7.