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Hurricane Sandy, dubbed as the worst storm for a thousand years, has destroyed much of the East Coast of the US, and could also cause a huge drop in gasoline prices around the country.
Tom Kloza, an oil analyst at Oil Price Information Services, has estimated that gasoline could rise in certain parts of the country, namely the East Coast where refineries have been off-lined by the storm, but that the majority of states in the US will actually experience lower prices due to the drop in demand.
“My guess,” he told CNBC, “is that we’ll have 20 to 25 states that will have prices below where they were a year ago. It could be in the $3.40s (a gallon) by next week. There’s a huge swathe of the country that’s going to be getting closer to $3.”
According to the AAA Fuel Guage Report, gas prices in Houston have fallen 9 cents over the past week to $3.31 a gallon, with the Texas average having fallen 10 cents to the same level.
Due to the reduction in refinery output, and the limited transportation of gasoline tankers on the road, residents around the North East will find gasoline stations emptying quickly.
Kloza said that he “expects lots of ‘no gas’ signs and little price movement until logistics can catch up with downstream markets.”
By. Charles Kennedy of Oilprice.com
Charles is a writer for Oilprice.com