Why You Shouldn't Panic About the Coming Increase in Gas Prices
(CNNMoney) Millions of drivers could spend a little more at the gas pump this month after a leak shut down part of an important East Coast pipeline.
But don't panic. The spike in gas prices -- as much as 15 to 20 cents per gallon -- will probably be short-lived.
"Gasoline will remain cheap, despite this little blip up," said Tom Kloza, chief analyst for the Oil Price Information Service. "It's not a trend, and it's all related to the fact that perhaps the most critical artery to distribute gasoline has been, for now, compromised."
Part of the Colonial Pipeline, which runs from Houston to New York, has been closed since Sept. 9. The leak, outside Birmingham, Alabama, led to a spill of about 250,000 gallons of gas.
That's bad news for the estimated 50 million people along the East Coast who are served by the pipeline. People in Alabama, Mississippi, Georgia, Tennessee, North Carolina and South Carolina will see the biggest price increases, Kloza said, and perhaps gas shortages.
Maryland, Delaware and New Jersey could also see a slight increase.
But Kloza also said the spill should only affect prices for 10 to 20 days. The pipeline's operator said full service will be restored next week.
The national average for gas is hovering around $2.20 per gallon this week, about 17 cents cheaper than at the same time last year. Prices are usually lower at this time of year because gas stations start using the cheaper winter blend of gasoline rather than the summer blend, which is formulated to combat smog.
As recently as 2014, the national average was above $3.50 a gallon. The price has fallen sharply since then, mostly because of a drop in the price of crude oil.
Although oil refinery maintenance this season may slightly lift prices, Kloza said he expects gas to stay fairly cheap. The national average, he said, could dip below $2 before the end of the year.
But it won't stay that way forever. Kloza said he expects crude oil prices to creep higher in 2017.
"There will still be a glut," he said, "but they're able to see a light at the end of the glut tunnel."