Gas prices to rise as winter storm rages, shutting refineries, stores and delaying shipments. Is $3 fuel coming?

Gasoline prices are expected to rise 10 to 20 cents a gallon in the coming days after winter storms knocked out about a dozen refineries in Texas, capping a sharp run-up in prices since Halloween and possibly heralding a move toward $3 by summer as the pandemic eases.

Regular unleaded gas averaged $2.54 a gallon nationally Wednesday, up two cents from the previous day, according to AAA.

The storm also has disrupted package deliveries to consumers and product shipments to retailers, possibly leading to shortages of some items on shelves. And it has shut hundreds of stores and factories.

The refinery outages have removed 3.5 million to 4 million, or about 20%, of the nation’s oil refining capacity, according to fuel-saving app GasBuddy and the Oil Price Information Service (OPIS). The refineries shut down due to power outages and shortages of natural gas, which are needed to run the facilities, says Tom Kloza, chief global head of energy analysis at OPIS.

Refineries also don’t work well in subfreezing temperatures, says Patrick DeHaan, head of petroleum analysis at GasBuddy.

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Wholesale gasoline prices have edged up 10 to 14 cents a gallon and retail prices should follow by Monday, Kloza says.

$60 crude oil 

Pump prices already have jumped from $2.10 a gallon in late November, DeHaan says. That followed a surge in crude oil prices in the wake of OPEC production cutbacks and anticipation of a spike in global demand by late spring as a COVID-19 vaccine becomes widely distributed, DeHaan says. Since late October, West Texas Intermediate, the U.S. benchmark crude oil, has climbed from about $35 a barrel to $61.

Also pushing up pump prices in recent months is low refining capacity, says analyst Phil Flynn of the Price Futures Group. Refiners have grappled with weak U.S. gasoline demand and thin margins amid the health crisis, as Americans drive less and air travel pulls back sharply. Some refiners have gone out of business while others have scaled back capacity because of both low demand and worker shortages due to COVID, Flynn says.

Gas prices will likely average about $2.70 a gallon within days, analysts say, but should fall back near current levels by March. But Flynn and DeHaan say refiners will begin to switch to cleaner – and more expensive — summer gasoline blends next month, nudging prices higher again.

$3 gas by spring?

Flynn says widespread vaccinations and Americans’ return to the road will likely push gas prices to $3 a gallon by late spring. DeHaan predicts $2.60 $2.80 but says $3 is possible.