Patrick DeHaan is a senior analyst at gasbuddy.com.
The largest refinery in Washington state caught fire late last week, a stark reminder of the possibilities that can play out as maintenance season approaches, and the shockwaves that such events can have on gasoline prices.
The fire broke out after trading had largely concluded for the day—meaning the immediate response was not initially felt at the pump, although prices around the West Coast had already risen significantly in the course of the last week.
When markets opened Tuesday, the response to the newly idled refinery were swift—spot prices climbed 10 cents in just a few moments time. By the time the day was over, spot prices on the West Coast had tacked on nearly 30 cents per gallon in most areas. The massive premium that came as a result of the fire is something motorists should prepare for—especially on the East Coast—as a significant chunk of refining capacity in the area is up for sale, and some of it already idled.
Motorists are sure to notice the huge spike on the West Coast rather quickly—many already know prices rise much quicker than they fall. Gasoline prices across California could add 3-6 cents a day for the next several days. Prices in Washington state could also spike a similar amount.
With spring well on its way and the shift towards summer gasoline already in motion in some areas of California, motorists shouldn't be surprised in how quickly gasoline prices will rise. Many will call on refineries to increase production—or even to build new facilities, something oil companies find next to impossible. One thing is for sure—however quickly prices rise this spring, politicians will surely make gasoline prices a political hot topic, and Americans may listen, even though refinery accidents and summer gasoline can't be stopped by such people in office.
Be ready, motorists—a rapid rise in gasoline prices is coming soon to a pump near you.