This fall’s hurricane season and its impact on gasoline prices could be “unusually important” for the upcoming U.S. presidential election, Goldman Sachs analysts wrote in a note.

The bank’s base case is that U.S. retail gasoline prices will average $3.4 per gallon in October.

However, the analysts estimate that an extreme hurricane season — which can affect refining capacity on the Gulf Coast — coupled with a normalization in current low speculative positioning in refined products, could push prices up to nearly $4/gallon.

On the flip side, prices could drop to $3.2 per gallon if crude prices are flat and disruptions are avoided.

“Retail gasoline prices are at the inflection point of $3.50/gal, corresponding to the emotionally salient $50 to fill up a tank, and where price increases get unusually large media attention,” the note said.

U.S. government forecasters have warned that the 2024 Atlantic hurricane season — which began June 1 — could see up to seven major hurricanes.

Hurricanes could cause significant disruptions to the roughly half of U.S. refining capacity that is located on the Gulf Coast, the bank noted.

Items that consumers buy most often, like gasoline, have an outsized impact on perceptions of inflation and consumer confidence, the Goldman Sachs analysts noted.

“This fall’s hurricane season… may therefore be unusually important for the upcoming U.S. presidential election,” they added.

U.S. President Joe Biden and Republican challenger Donald Trump are tied in the race to win the November presidential election, a May Reuters/Ipsos poll showed.
Source: Reuters (Reporting by Kavya Balaraman in Bengaluru; editing by Jason Neely)