What can Trump do about gas prices after Harvey?

Trump taps oil reserve to keep gas prices down after Harvey

The U.S. government has several levers the idea can pull to ease the pain at the pump caused by Hurricane Harvey.

Historic flooding inside U.S. Gulf Coast has sparked fears of a gasoline shortage caused by refinery outages, port closures along with pipeline shutdowns. Nearly one-quarter of the nation’s refinery capacity has been knocked offline by Harvey, according to S&P Global Platts.

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The Trump administration responded on Thursday by authorizing two releases totaling 1 million barrels of crude oil by an emergency stockpile known as the Strategic Petroleum Reserve.

Despite the 17 cent increase since Harvey hit, gasoline prices remain low ($2.52 per gallon on average) along with there is usually wish in which refineries along with ports will reopen soon enough to prevent a shock to American drivers. Still, the Trump administration may be forced to consider more action should the logistical problems caused by Harvey deepen.

“The longer these refineries remain offline, the bigger the impact on gasoline prices,” said Michael Tran, director of global energy strategy at RBC Capital.

Related: Trump taps emergency U.S. oil reserve

Dusting off the Sandy playbook

One option is usually Homeland Security could grant a blanket waiver for the Jones Act, which requires shipments between U.S. ports to have an American crew along which has a ship built inside U.S. These requirements can make shipments “quite expensive along with cumbersome,” Tran said.

Gasoline shortages caused by Superstorm Sandy in 2012 led the Obama administration to grant Jones Act waivers, allowing shipments of gasoline to the East Coast using foreign flagged ships.

Joe McMonigle, a former Energy Department official during the Bush administration, said Jones Act waivers would certainly make the idea more economical for Northeast refiners to receive oil stuck inside U.S. Gulf rather than source the idea by Nigeria or various other places overseas.

“in which could ease some of the problems going forward,” said McMonigle, who is usually senior energy analyst at Hedgeye Potomac Research Group.

Tapping emergency gasoline stockpiles

After Superstorm Sandy, the U.S. also created a Northeast gasoline supply reserve, which is usually located in brand new York, Boston along with Maine. RBC’s Tran said he found the idea puzzling in which the Trump administration didn’t tap in which reserve.

“in which was put into place for precisely in which reason. the idea’s essentially a rainy day fund,” Tran said.

By tapping the Northeast gasoline stockpile, the government could ease pressure caused by the shutdown of the Colonial Pipeline, which normally carries vast amounts of gasoline between Houston along with the East Coast.

One problem: in which emergency reserve only holds about 1 million barrels of gasoline, meaning the idea can only meet the region’s enormous appetite for gas for a short period.

The EPA has also tried to ease gas shortages by relaxing certain regulatory standards. In recent days the agency granted waivers in Texas, Louisiana, Georgia along with various other states on rules in which normally require the use of low-volatility gasoline during the summer.

McMonigle, the former DOE official, said the administration is usually also likely to receive more requests by refiners requesting the Discharge of oil by the Strategic Petroleum Reserve, which is usually a complex of storage tanks along with underground caverns.

Related: Gas prices spike again, currently up 17 cents since Harvey

Wait along with see

There’s a case to be made in which the government doesn’t need to do much because the gas cost hike is usually supposed to go away on its own. Some refineries inside U.S. Gulf Coast are trying to start back up along with key ports are working to reopen.

“the idea seems as though the energy complex is usually slowly awakening,” said Vincent Piazza, senior energy analyst at Bloomberg Intelligence.

Help is usually also on the way: Higher gasoline prices have enticed a jump in shipments by Europe. A fleet of tankers carrying millions of gallons of gasoline by Europe could help ease the gasoline crunch, though the idea will take time before these shipments arrive.

sy88pgw (brand new York) First published September 1, 2017: 11:48 AM ET


What can Trump do about gas prices after Harvey?

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