LONDON—Gasoline futures continued to soar Friday morning, as the after-effects of Hurricane Harvey heralded potentially fundamental long-term shifts in global oil and gas markets.

LONDON—Gasoline futures continued to soar Friday morning, as the after-effects of Hurricane Harvey heralded potentially fundamental long-term shifts in global oil and gas markets.

The price of Nymex reformulated gasoline blendstock for September—the benchmark contract—was up nearly 14%, at $2.1470 a gallon, following eight days of gains that have driven prices up to two-year highs.

Since Harvey made landfall a week ago, the storm, which has since weakened to a tropical depression, has crippled more than 20% of U.S. refining capacity, resulting in a nationwide petroleum shortage that has seen gas prices spike across the globe.

Wall Street Journal, Friday, September 1

Last week we noted the media was predicting higher crude oil prices due to refinery closings. We took the opposite tack noting that crude oil prices fell 20 percent after Hurricane Katrina hit New Orleans. Indeed, last Monday, crude oil prices fell $1.65. So how would the media explain that one? Oh, since the refineries were closed, purchases of crude oil dropped and therefore the price of crude dropped. There was no mention of their failed forecast.

But the article misses the real point here. Already in San Antonio, it matters not what the posted price of gasoline is. Indeed station signs indicate $2.59, a big jump form $2.00 last week. But no matter the posted price, there is no gasoline available. Panic set in yesterday with a ‘run on gasoline supply.’

Those of us that lived through the early 1970s embargo know what to expect next. Now a panic of availability has set in. Eventually when gasoline supplies arrive, one can expect they will be quickly drained from the stations into individual autos exhausting supply once again. One can only speculate how many deliveries would be required before the panic subsides. Here is yet another example of the herding of social mood in the short term.

This will no doubt lead to what I will term a Lost Week. Automobile companies bought large city trolley car lines and closed them long ago. Riding a bus might work for a short distance but across miles and miles of a large city is not realistic. So, we will be faced with many simply unable to get to work, school, or anywhere else requiring more than a bicycle ride.

This will cause a "dent" in productivity and output for the Gross Domestic Product of Texas this quarter.

And what is the market reaction to all this? All but one of my 21 liquid pipeline stocks traded to the upside yesterday. Enbridge Energy Partners has fallen from $24 to just under $14. IN the last three days it has soared to $15.23, rising above all its 34 day Moving Average. Alerian MLP the ETF for liquid pipelines jumped 2.66 percent Thursday. Shares of natural gas pipelines are also moving up.

We are still patiently waiting for a bottom for the entire energy complex. The best indicator is the percent of stocks in bullish formation. That indicator has bounced at 30 percent, no up to 34.38. Clearly we need a close over 50 percent to move to a bullish position.

The energy service ETF, XES, has not turned up, yet. It has returned to the same low price level last seen at the February 2016 bottom in oil prices. We have numerous other technical indicators which suggest the low should arrive in the next couple of months.

One of the most sensitive indicators is the price of Transocean RIG, the big offshore driller. That stock has fallen from $16 at the start of the year, just bouncing off $7.50 to close Thursday at $8.16. As noted here previously, RIG is trading at 20 percent of book value. It would be impossible to duplicate the offshore assets RIG possesses. This is the embodiment of what Warren Buffet refers to as a "moat around the company" making entry by another firm near impossible. This column is not about making individual stock recommendations but RIG at 20 percent of book value looks inviting to me.

Markets in general are shrugging off Hurricane Harvey, world exchanges trading to the upside.

For now expect a Texas slow down. Our sun belt economy based on individual automobiles for transportation, is literally out of gas.

Follow Dennis at http://www.themarketperspective.com.