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Hurricane Threat in Western Gulf Sending Gas Prices Up

The cost of gasoline at the pump is expected to shoot up this week, as oil and gas producers from Mexico to Louisiana gear up for heavy rains and winds as remnants of a tropical storm circulating over Mexico's Yucatan Peninsula threaten to redevelop into a hurricane.

Wholesale gasoline prices along the U.S. Gulf Coast were slightly stronger on Tuesday ahead of the storm, traders said.

The remains of Tropical Storm Harvey, which are scattered over Mexico, have a 90 percent chance of developing into a hurricane over the next two days, the National Hurricane Center said Tuesday.

A tropical depression could form over the Bay of Campeche, which is close to 80 percent of Mexico's oil and gas production, on Wednesday and Thursday and grind toward the Texas coast on Friday, the Miami-based center added.

The storm could develop into a Category 1 hurricane with wind speeds of at least 74 miles per hour (120 kph) by Friday, and move slowly or even stall over central Texas during the weekend, said John Tharp, forecast operations supervisor for Weather Decision Technologies in Norman, Okla.

"Rain does look to be a very serious concern with this system. A widespread 6 to 12 inches (15 to 30 cm) appears likely and it will be possible for the most impacted locations to see in excess of 25 inches (63.5 cm) of rainfall" between Friday and Monday, Tharp said, warning that it was still too early to tell where the worst of the rainfall would land.

Forecasts currently call for the budding storm to make landfall just east of Corpus Christi, and make its way to western Louisiana by early next week, he said.

A serious rain event or heavy winds could disrupt oil and gas production, as companies evacuate platforms in the Gulf of Mexico and refiners along the coast face potential flooding.


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