Special Edition AAA Fuel Report: Tropical Storm Isaac
Phoenix. Aug. 27, 2012. Tropical Storm Isaac has yet to make landfall, but is already wreaking havoc on the Gulf of Mexico, a region that accounts for about a quarter of the nation’s refining capacity.
Isaac, which is forecasted to become a hurricane and make landfall this week, has already resulted in precautionary refinery closures, evacuations and lifts in wholesale prices. In fact, the U.S. Bureau of Safety and Environmental Enforcement reported yesterday that 25 percent of daily oil production in the Gulf of Mexico has been halted in advance of the storm.
“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.
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.
“With the countdown to Labor Day weekend underway, Tropical Storm Isaac’s timing couldn’t be worse,” said Gorman. “More than 564,000 Arizonans will be taking to the road later this week, and many of them will be keeping a close eye on how this storm will impact their travel budgets.”
As an advocacy organization representing the motoring public, AAA offers a variety of free resources to help motorists stay informed about the price of gasoline and keep fuel budgets in check. Visit az.aaa.com/news/fuel for more information.
AAA Arizona, the Arizona affiliate of AAA, provides automotive, insurance and auto travel services to more than 825,000 Arizona members. Annually, AAA’s Roadside Assistance responds to more than 450,000 calls for help on Arizona roadways. The auto club also provides insurance, travel, auto repair, discounts and financial services to AAA members. Since its founding in 1927, AAA Arizona has been a leading advocate for the safety and security of all travelers.