Gasoline prices spiked on Monday in the aftermath of Tropical Storm Harvey as the downpour of rain failed to relent in the Gulf of Mexico, resulting in prolonged refinery closures.

The refining capacity in Texas has been decreased by 2.2 million of barrels of oil a day while the major ports in Corpus Christi and Houston were also closed as the deluge of rain pounded the Gulf Coast for the fourth consecutive day.

The national average for gas prices are likely to rise over $2.43 a gallon this week, which is the highest level in nearly two years because of the continued Harvey disruptions, said Patrick DeHaan, a senior petroleum analyst for, a Boston-based provider of retail fuel pricing information and data. Gas prices in the Great Lakes region which includes Michigan, Indiana, Ohio and Kentucky are predicted to rise Tuesday or Wednesday, he said. 

Gasoline prices in Texas averaged $2.17 a gallon, rising three cents from last week's average and 6.6 cents from last month, said GasBuddy. What's more, gasoline price are rising to $2.39 a gallon in the Dallas Fort Worth region where many Houstonians evacuated to ahead of the Hurricane, based on GasBuddy data.

"Gas prices likely to start moving higher countrywide," DeHaan said. "I wouldn't say it's a one and done spike, but gradual."

The crack spreads have also risen to the highest level in months for "refiners still in the game, encouraging them to pump out gasoline as Gulf remains challenged," he said in a tweet.

The hike in prices on Monday is merely a short-term phenomenon, said Patrick Morris, CEO of New York-based HAGIN Investment Management.

"It is maybe 5% to 10% higher at the pump, but it comes back down after Labor Day," he said. "Talk about a weather effect.

The levels of gasoline only two weeks were too high, but the shortage has resulted in a run-up in prices as the market is reacting to the "day-to-day weather and when the sun comes out and the 20-foot deep lake you once called a Walmart parking lot dries up, gasoline and distillate will drop back to a week ago Friday prices," Morris said. "It should be a great short opportunity for investors the instant they announce an end to the rain."

Despite the disruptions to production and refining, crude oil prices have actually fallen over the past few days and sank to $46.70 at 4:09 ET.

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"This drop reflects both the abundance of oil and refined product in storage as well as dampened demand for gasoline and diesel along the Texas Gulf Coast," said Bernard Weinstein, associate director of the Maguire Energy Institute at Southern Methodist University's Cox School of Business in Dallas. "Wholesale gasoline prices have increased only 7 cents per gallon over the past week and are not likely to increase much further even with the Labor Day weekend coming up."

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The rest of the U.S. does not need to fear a shortage in gasoline as the unprecedented storm has greatly impacted demand in Houston and other cities in south Texas as the two airports in the fourth largest city remained closed as their runways are still flooded.

"Demand will be lower than normal because of travel disruptions on the Gulf Coast due to Harvey and the southeast Coast because of tropical storm Irma," he said.

The Houston economy is not likely to be impacted long-term to the city or the oil and gas industry despite the short-term disruption, Weinstein said.

"Indeed, Harvey may turn out to be a 'net plus' for the economy as billions of insurance and disaster aid dollars flow into affected Gulf Coast communities and repair and rebuilding begin" he said.

The storm, which has been downgraded from a category 4 hurricane, is expected to churn additional high winds and severe rainfall through Friday, pushing up prices in other markets. The rainfall is also impacting Louisiana which refines 3.696 million barrels of oil a day while the Texas Gulf Coast generates 4.944 million barrels of oil a day while the Louisiana Gulf Coast is home to, according to the US Energy Information Administration.

The storms could increase the rainfall to the already deluged states with accumulations of 15 to 25 inches through Friday in Texas and Louisiana," the National Hurricane Center predicted. The total amount of rainfall could exceed 50 inches in the Houston/Galveston metropolitan area."

The refined product futures rose sharply today and at 1815 GMT, the October NYMEX RBOB crack spread was trading around $19.70 a barrel, up from $16.84 a barrel on Friday, according to a S&P Global Platts report. The October ULSD crack was trading around $21.85 a barrel, up from $20.33 a barrel.

The loss of gasoline production from the Gulf Coast is affecting global markets since the Corpus Christi refineries produce 4.4% of the capacity in the U.S., while the refineries in Houston, the fourth largest American city, and Texas City together generate 12% of refining capacity, producing a mixture of products ranging from gasoline to jet fuel.

Magellan Midstream has halted operations of their two long-haul pipelines, BridgeTex and Longhorn, which moves 675,000 barrels of crude oil a day of from the Permian Basin in Texas to the Gulf Coast, said S&P Global Platts.

The crack spread for Asia's gasoline also rose and Asia's 92 RON gasoline crack against ICE Brent was at $13.19/b, up 22 cents and near the 17-month high of $13.54 a barrel, said S&P Global Platts.

"With European gasoline supply likely diverted toward the U.S. or to buyers of U.S. barrels, the Asian market was seen tightening," the report said.

Jet fuel also spiked and rose to the highest levels in nearly four and a half years as the benchmark 54 grade jet fuel on the Colonial Pipeline traded as high as NYMEX ULSD plus 5 cents per gallon.

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