'The big X factor': Why Hurricane Dorian could cause gas prices to spike

As Hurricane Dorian takes aim at Florida and the Bahamas, gas prices in Florida are spiking. AAA says a gallon of self-serve regular in Florida now costs $2.44/gallon on average. That’s up 6 cents from a week ago, and could go even higher.

“Florida is very unique in that all of its gasoline is delivered by maritime delivery, by barge or tanker,” Robert Sinclair of AAA told Yahoo Finance’s The First Trade on Friday. “When the weather is bad, barges and tankers can’t sail and that’s why we see prices skyrocket in Florida.”

But the impacts of the storm could be felt far beyond that state alone. The current forecast track has Dorian sitting over Florida for days, dropping heavy rain, but if it moves into the Gulf it could cause serious disruptions in oil production.

Arian Britto fills containers with gasoline at BJ's Wholesale Club in preparation for Hurricane Dorian, Thursday, Aug. 29, 2019, in Hialeah, Fla. Hurricane Dorian is heading towards Florida for a possible direct hit on the state over Labor Day. (AP Photo/Lynne Sladky)

“There are about 185 offshore oil rigs in the Gulf of Mexico,” Sinclair told Brian Sozzi. “The breadbasket of oil manufacturing and refining is on the Gulf Coast, so if a storm hits that area like Harvey did a couple years ago, you could see gasoline prices go up 25 cents to 30 cents a gallon.”

There also could be impacts on the pipelines that carry gas to the Northeast and beyond.

“The storm has the possibility of high winds, knocking refineries off-line, but also knocking out electricity that powers the pumps for all those pipelines going from the gulf coast up the eastern seaboard,” Sinclair said.

AAA is forecasting gas prices will decline upwards of 25 cents this fall, down to an average $2.40/gallon price, thanks to cheaper crude oil and a switch to less expensive winter blends. But Sinclair cautions that’s contingent on Dorian not causing major damage as it passes through.

“Hurricane Dorian is the big X factor,” Sinclair said. “If that thing hits the gulf coast, all bets are off.”

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