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Labor Day — one of the busiest driving holidays in the US — is on the horizon, and so is Hurricane Idalia. That’s potentially bad news for gas prices.
The storm, which is expected to make landfall in Florida as a Category 3 hurricane on Wednesday, could bring 100 mile-per-hour winds and flooding that extends hundreds of miles up the east coast. The impact could take gasoline refinery facilities offline and may limit some Gulf oil production and supplies. Plus, demand for gas is expected to surge as residents of the impacted areas evacuate.
“Idalia… could pose risk to oil and gas output in the US Gulf,” wrote the Nasdaq Advisory Services Energy Team.
The storm is expected to make landfall as drivers nationwide load into their vehicles for the Labor Day weekend, pushing up the demand for gasoline even further.
All together it means the price of oil and gasoline could remain elevated well into the fall.
Generally, summer demand for oil tends to wane in September, but so does supply as refineries shift from summer fuels to “oxygenated” winter fuels, said Louis Navellier of Navellier and Associates. Since the 1990s, the US has required manufacturers to include more oxygen in their gasoline during the colder months to prevent excessive carbon monoxide emissions.
With the storm approaching, that trend may not play out.
What’s happening: Gas prices are already at $3.82 a gallon. That’s the second highest price for this time of year since at least 2004, according to Bespoke Investment Group. (The only time the national average has been higher for this period was last summer, when prices hit $3.85 a gallon).
Geopolitical tensions have been supporting high oil and gas prices for some time. Recently, increased crude oil imports into China, production cuts by Russia and Saudi Arabia and extreme heat set off a late-summer spike in gas prices. And the threat of powerful hurricanes could send them even higher.
Analysts at Citigroup have warned that this hurricane season could seriously impact power supplies.
“Two Category 3 or higher hurricanes landing on US shores could massively disrupt supplies for not weeks but months,” Citigroup analysts wrote in a note last week. In 2005, for example, gas prices surged by 46% between Memorial Day and Labor Day because of the landfall of Hurricane Katrina, according to Bespoke.
What it means: The Federal Reserve and central banks around the world have been fighting to bring down stubbornly high inflation for more than a year. This week we’ll get some highly awaited economic data: The Fed’s preferred inflation gauge, the Personal Consumption Expenditures index, is due out on Thursday. But the task of inflation-busting is a lot more difficult when energy prices are high, and it’s even harder when they’re on the rise.
The PCE price index uses a complicated formula to determine how much weight to give to energy prices each month, but they typically comprise a significant chunk of the headline inflation rate.
“Crude oil price remains elevated, even after the surge at the start of the Russia-Ukraine War,” said Andrew Woods, oil analyst at Mintec, a market intelligence firm. “Energy prices have been a major contributor to persistently high inflation in the US, so the crude oil price will remain a watch-out factor for future inflation.”
High oil and gas prices are one of the largest contributing factors to inflation. That’s bad news for drivers but tends to be great for the energy industry, as oil prices and energy stocks are closely interlinked.
OpenAI launches a version of ChatGPT for businesses
OpenAI, will release a version of its popular ChatGPT tool made specifically for businesses, the company announced on Monday.
OpenAI unveiled the new service, dubbed “ChatGPT Enterprise,” in a company blog post and said it will be available to business clients for purchase immediately.
The new offering, reports my colleague Catherine Thorbecke, promises to provide “enterprise-grade security and privacy” combined with “the most powerful version of