Hurricane Sandy, which may become the worst storm to hit the U.S. East Coast in 100 years, may slow a decline in gasoline prices just weeks before the presidential election.
The National Hurricane Center track calls for Sandy to go ashore just south of the Delaware Bay on Tuesday and move northwest between Baltimore and Wilmington, Del. Five refineries in Delaware, New Jersey and Pennsylvania that produce about 600,000 barrels a day of gasoline may be shut down, according to Andy Lipow, president of energy consultant Lipow Oil Associates Llc in Houston.
Extended outages may deplete East Coast supplies, which Energy Department data show are 9.1 percent below a year ago. Gasoline at the pump has fallen 6.4 percent nationwide since Oct. 8.
"It would have a major impact," said Phil Flynn, senior market analyst at Price Futures Group in Chicago. "The first thing you're going to think of is demand destruction if people can't drive. But product levels are well below normal. You could see a rush to the pumps to buy ahead of the storm and that could cause an uptick in demand."
Gasoline for November delivery rose 2.27 cents to settle at $2.6991 a gallon on the New York Mercantile Exchange. Prices have jumped 3.7 percent in the past two days, after sinking 22 percent since the end of September.
The five main East Coast refineries are Philadelphia Energy Solutions' Philadelphia; PBF Energy Inc.'s Paulsboro, N.J., and Delaware City, Del.; Monroe Energy Llc's Trainer, Pa., and Phillips 66's Linden, N.J., plants.
Together, they process about 1.15 million barrels a day of crude.
Sandy may shutter the plants for five to seven days due to pre-storm closures and power outages, forcing Gulf Coast refiners including Valero Energy Corp., Marathon Petroleum Corp. and Phillips 66 to make up the difference, Roger Read, an energy analyst with Wells Fargo & Co. in Houston, said Friday in a note to investors.
The loss of capacity would be "meaningful given relatively low refined product inventories nationally combined with the fact that the U.S. East Coast is already an import-dependent market," Read said.