Texas Refinery Explosion May Lead To Gas Price Spike, Analysts Say

A recent Texas oil refinery explosion may induce average gas prices above $4 per gallon.

As The Daily Wire reported on Thursday, a massive blast occurred at one of the nation’s largest ExxonMobil refineries in Baytown, Texas — sending several workers to a local hospital. The company explained that the “first priority remains the safety of people, including our employees, contractors and the surrounding community.”

In the aftermath of the incident, Oil Price Information Service chief oil analyst Tom Kloza told CNN Business that gas prices may see a sudden increase. The outlet explained:

Kloza said he would not be surprised to see average prices rise to $4 a gallon in much of the country this spring and summer as the economy continues to recover and demand for gas increases. The limited supply of gasoline due to the loss of refining capacity in the United States and elsewhere will only help lift prices higher.

The good news for drivers — for now — is the refinery explosion won’t immediately send gas prices higher. That’s mostly because the next six weeks — from right before Christmas to early February — is historically the period of lowest demand for gasoline nationwide. Winter weather and short daylight hours discourage people from driving. Wholesale gas prices were up only 2 cents a gallon to $2.19 in early trading Thursday… But by spring, when demand starts to increase again, the lost output from Baytown will likely be felt at pumps nationwide.

According to the United States Energy Information Administration, Baytown Refinery — the fourth-largest refinery in the nation — has an average daily capacity of 561,000 barrels.

According to AAA’s National Average Gas Prices tracker, the current price for regular gasoline is $3.29. One year ago, regular gasoline cost $2.25 — indicating a 46% increase. Indeed, the Biden administration has struggled to address high gas prices over the past year.

Making no mention of its decision to prevent new domestic drilling projects, a recent blog post from the White House emphasizes Biden’s release of oil from the strategic reserves, as well as alleged price gouging from oil companies:

The President understands that gasoline prices squeeze families’ budgets. That’s why he has taken a series of bold actions to save Americans money at the pump. The President announced a historic release from the Strategic Petroleum Reserve in parallel with other countries to help address the imbalance between the supply and demand of oil and to spur greater competition in the gasoline market. And, the President asked the Federal Trade Commission to consider whether illegal conduct is costing families at the pump. Industry costs have declined as crude oil and wholesale gasoline prices have receded. Instead of oil and gas companies padding their profits, Americans should see falling prices.

The average price at the pump is down nearly 10 cents per gallon since the peak last month, and prices are continuing to fall. And, the price of gasoline on the wholesale market has fallen even more than that over recent weeks, dropping over 30 cents per gallon since its peak.  The President expects those savings to be passed on to Americans as quickly as possible. To date, it hasn’t been happening fast enough. That’s why the President asked the Federal Trade Commission to examine mounting evidence of anti-consumer behavior by oil and gas companies that keeps prices elevated.

According to the most recent consumer inflation data, price levels for gas and food have risen by 58% and 6% since last year, respectively.

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