Hurricane Harvey could send gas prices up in Chicago

With Hurricane Harvey bearing down on the oil refinery-rich Texas coast, Chicago-area drivers should brace for a potential price surge at the gas pump.

Chicagoland gets gasoline from its own refineries — one each in Whiting, Ind., Joliet and Lemont — which are "sitting on ample inventory," said Beth Mosher, a spokeswoman for AAA Chicago. But if Southern states that get gas from Texas see a shortage, Chicago-area refineries could ship theirs south.

"(That) can then cause Chicagoland or Illinois prices to rise," Mosher said.

Gas prices in the Midwest were already on the upswing, with the Labor Day travel weekend fast approaching.

The average price for a gallon of unleaded gasoline in Illinois on Friday was up almost 4 cents from last week and about 7 cents from this time last year. In the Chicago metro area, it was up 7 cents from a week ago and about 6 cents from a year ago.

AAA expects gas prices to increase 5 to 15 cents per gallon nationwide as a result of Hurricane Harvey, Mosher said.

"Typically, prices rise much quicker than they come back down," she added.

The National Weather Service expects Harvey to make landfall Friday night or early Saturday. Some parts of the Texas coast could see 35 inches of rain before Wednesday, enough to "cause catastrophic and life-threatening flooding."

Harvey was already generating swells Friday morning affecting coasts in Texas, Louisiana and northeastern Mexico. Normally dry areas near the coast are expected to see major flooding as the storm surge and tide rise and push inland.

The what-ifs of the storm's fallout have already driven up wholesale prices throughout the country, said Tom Kloza, chief oil analyst for the Oil Price Information Service. That's likely to trickle down to the pump by the weekend.

Texas refineries have shut down in preparation for the storm. Although it's unlikely Harvey will knock out refineries like Hurricane Katrina did back in 2005 — when gas prices were sent "screaming higher" for six to eight weeks — the concern is unmistakable, Kloza said.

"The prospect of a Katrina-like event, however unlikely, is enough to spook the seller," he said. "And when sellers are spooked, markets move higher."

Prices will move up in the Chicago area in sympathy, so to speak, Kloza said. But it won't be unbearable. It will likely give higher summer gas prices, which usually taper after Labor Day, a longer run.

"We're not looking at the end of cheap oil prices," Kloza said, adding that he considers a gallon below $3 to be cheap. "It won't be apocalyptic. It'll be annoying."

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