Gas expected to spike around 14 cents in N.L. in wake of Texas floods

Newfoundland and Labrador may be thousands of kilometres from the flooding in Houston, Texas but drivers in the province will feel the effects of the damage when they fill up their vehicles this week.

It's no doubt that we're going to be paying something extra.- George Murphy

Following the worst storm to hit Texas in decades, many refineries in the oil-producing state have shut down, driving up the price of gasoline across much of the continent.

According to George Murphy of the Consumer Group for Fair Gas Prices, drivers in Newfoundland and Labrador should experience a sharp increase in prices in the coming days.

"The numbers are coming in now at about 14 cents per litre upwards," he told the St. John's Morning Show on Tuesday. "It's no doubt that we're going to be paying something extra."

Murphy said that after the initial spike this week, prices should begin to gradually move downward again, with the process happening a little faster in St. John's due to increased competition between gas stations.

"In most areas of the province you won't see that relief until sometime next week," he said.

Gas up, but oil down

While the disaster in Texas will no doubt drive up the price of refined gasoline, the refinery stoppages should actually have the opposite effect on crude oil, Murphy said.

He expects Brent Crude to stay around $52 a barrel over the next week or so, as there will actually be a glut in the marketplace as refineries stop taking in oil to turn into gasoline and other refined products.

"The simple fact is that if they can't refine it there's no point selling it. So the price of oil ends up going down, believe it or not," Murphy said.

"More often than not you'll see the price of the refined product go up, but you'll see the price of the raw product go downwards simply because it can't be refined."