Arizona gas prices, and those across the country, may jump now that fuel production has taken a hit from Tropical Storm Isaac, AAA Arizona reported Monday.
The Gulf of Mexico accounts for 20 percent of U.S. oil production. With Isaac forecasted to become a hurricane, refineries have taken precautions and shut down.
Arizona drivers are currently paying an average of $3.550 per gallon, an increase of more than 9 cents from last week. Nationwide, the current fuel average is $3.750, up 3 cents from last week. Factors behind the recent price lift include West Coast and Midwest refinery issues as well as geopolitical tensions in the Middle East.
Crude oil, which accounts for about 72 percent of the cost for a gallon of gasoline, is currently trading in the mid $90 per barrel range.
“In fact, the U.S. Bureau of Safety and Environmental Enforcement is reporting that 39 production platforms and eight drilling rigs have been evacuated as of Sunday. The bureau also estimates that about 24 percent of the current daily oil production and 8 percent of natural gas production has been halted in advance of the storm,” the release states.
“Until Tropical Storm Isaac makes landfall and the full extent of its damage is assessed, it’s difficult to say how and to what extent prices will be affected,” said Linda Gorman, director of communications and public affairs for AAA Arizona. “AAA urges motorists to fill their vehicles as normal and to avoid topping-off, which has the potential to create an unnecessary crisis.”
The effect that Tropical Storm Isaac will have on fuel prices largely depends on the damage incurred by threatened infrastructure. Should infrastructure sustain little or no damage; facilities will likely resume production once the storm passes, a scenario that would mean Isaac’s market uptick will be short-lived. However, should refining infrastructure sustain excessive damage, Isaac’s market effect will be longer lasting.
“With the countdown to Labor Day weekend under way, Isaac’s timing couldn’t be worse,” said Gorman. “More than 564,000 Arizonans will be taking to the road, and many of them will be keeping a close eye on how this storm will impact their travel budgets.”