Texas Freeze Could Spike Gas Prices Across Nation

Get ready for gas prices to spike as the deep freeze in Texas takes hold of the oil refineries across the state.

According to a report by travel and navigation app GasBuddy, the national average gasoline price may jump as much as 10 to 20 cents a gallon from the existing price of $2.54 a gallon over the next two weeks dues to the freezing temperatures in Texas that have caused refining capacity to drop.

Gas Buddy said that millions of barrels of capacity have been reduced as it estimates that 11 refineries in Texas and Kansas have at least partially shut down due to the frigid weather.

As of Tuesday, midday, the site said that about 20% of total U.S. refinery capacity, or 3.48 million barrels, were offline. This was just shy of the number of refineries shut down during Hurricane Harvey in 2017.

According to the report, gas prices are expected to reach a national average of $2.65 to $2.85 a gallon, marking the highest prices per gallon since 2019 and the highest seasonal prices in five years. Gas Buddy estimates also place gasoline prices at $3 a gallon by Memorial Day as a result of the Texas freeze as refiners look to recover demand.

“The quicker the affected refineries are able to come back online, the better, and perhaps less painful for motorists than if they remain out of service for even longer,” said Patrick De Haan, head of petroleum analysis at GasBuddy.

“Oil prices have continued to rally as global oil demand recovers from the worst of the COVID-19 pandemic, and now the extreme cold weather shutting refineries down, us motorists just can’t seem to catch a break. We probably won’t see much, if any relief, anytime soon,” he added.

Giacomo Romeo, a Jefferies analyst, believes that the situation is far worse, as he told Yahoo Finance that he believes that half of Texas’ 5.8 million barrels per day of refining capacity is not operating due to the weather conditions.

De Haan said the prices may not reduce even as the weather returns to more moderate levels in the South.

“Even after this event is over, it may take refineries days or even a week or two to fully return to service, and with gasoline demand likely to accelerate as we approach March and April, the price increases may not quickly fade,” he said.