Note to lawmakers returning to work: It’s not gouging

Sept. 1, 2017
Congress will return from recess with gasoline and diesel prices rising. The coincidence is dangerous.

Congress will return from recess with gasoline and diesel prices rising. The coincidence is dangerous.

Fuel prices have powerful reasons to rise. Even before Hurricane Harvey become a disaster without precedent, electronic signs along Houston highways encouraged motorists to fill fuel tanks in preparation for the storm developing in the Gulf of Mexico.

Subsequent events validated the advice.

But the effect was a regional demand boost just before a punch to the gut of America’s capacity to manufacture and transport vehicle fuel.

At this writing, 10 Gulf Coast refineries were shut. Major crude oil and product pipelines were closing or limiting throughput. Ports were closed.

Production exceeding 300,000 b/d was shut in in the Gulf of Mexico and as much as 500,000 b/d onshore, mostly in the Eagle Ford play.

The biggest single problem, in terms of both immediate and lasting effect, was the sudden loss of 3 million b/d of capacity from closed refineries and curtailment of operation at facilities with capacity totaling a further 2-2.5 million b/d.

Wisely, the federal and state governments relaxed volatility requirements to ease quality bottlenecks.

But the blow to supply was serious, and it occurred a week before a holiday weekend at the end of the driving season. Product prices reflected the trouble.

The gasoline blendstock futures price in New York gained 20¢/gal between Aug. 25 and Sept. 1 and was still climbing. Retail prices were zooming. Soon they’ll breach thresholds of impatience for consumers who have enjoyed a couple of years of prices comfortably low.

It’s traditional, at times such as this, for politicians who don’t understand markets or who exploit any opportunity to malign oil companies, to complain of gouging.

But this jolt, which like all its predecessors will be temporary, follows a long price slump that meant unemployment for many thousands of workers, some now with houses now under water in Houston.

If they occur, therefore, complaints about gouging won’t just be stupid like usual. They’ll be downright irritating.

(From the subscription area of, posted Sept. 1, 2017; author’s e-mail: [email protected])

About the Author

Bob Tippee | Editor

Bob Tippee has been chief editor of Oil & Gas Journal since January 1999 and a member of the Journal staff since October 1977. Before joining the magazine, he worked as a reporter at the Tulsa World and served for four years as an officer in the US Air Force. A native of St. Louis, he holds a degree in journalism from the University of Tulsa.