Hurricane Ike aftermath causes $5 gas in some areas
Photo by CoreBurn. Licensed under Creative Commons license 2.0.
Hurricane Ike has done its structural damage to Texas and other areas, but the aftereffects are still raging. While gasoline prices these last few months in the U.S. have not been climbing as crazily as they were earlier this year, the South's most recent hurricane is causing pump prices of up to $5 a gallon in some areas - from Florida to Tennessee. In Knoxville, TN, for example, prices jumped from $3.66 to $4.99 overnight thanks to fears of a supply shortage and news that oil rigs are drifting in the Gulf of Mexico. While it's unlikely that prices will remain this high for long, Ike and other hurricanes this season remind drivers of fuel-efficient vehicles why their cars are a little piece of security in tough times. If you've got a low-mpg ride in an area with $5 gas today, perhaps it's a good time to dust off that bike for the ride to work.
[Source: AP]
Reader Comments (Page 1 of 1)
stevefazek 8:46AM (9/15/2008)
this is one of the few true cases of price gouging. Just like in katrina its a few bad apples. One station will be charging 5 bucks a gallon and three blocks down the road its 4bucks a gallon.
The station owners didnt learn last time some of them where fined tens of thousands of dollars. They normally get whacked with twice the profit they made off of the gas
Reply
meme 12:16PM (9/15/2008)
Not only will they get whacked by the state, but if they're franchised -- say, a "Shell" station, or a "BP" station, or whatnot -- the oil company whose name they're operating under can hit them with fines and revoke their franchise license. This happened quite a few times after the post-Katrina gouging. Franchised stations have a number of standards that the company requires them to meet, such as no price gouging, cleanliness, safety, etc.
TX CHL Instructor 8:56AM (9/15/2008)
A jump of more than 30% on *fear* of shortages. Ike caused about 1% of the rigs in the Gulf of Mexico to go offline, possibly for 3 or 4 weeks. If a 1% drop in crude production can do that, then we need to be stationing military defenses at all offshore oil rigs, because destroying a few oil rigs looks like it would be a bigger economic disruption than merely flying passenger aircraft into tall buildings.
This is simple gouging. Fortunately, I now live close enough to work that the price of gasoline is a non-issue.
Once the hysteria passes, the prices will drop. The oil companies are discovering that demand for gasoline is a bit more elastic than they thought. High prices really do change consumption behavior. Among other things, Hummer dealerships are closing, and tiny, gas-efficient cars are selling at a premium over sticker.
Reply
stevefazek 9:30AM (9/15/2008)
The media does a great job at scaring people too. Remember after katrina the picture of a rig smashed up into a bridge? And another one tipped over on a beach? They made it seem like they where ripped off the ocean floor stopping oil production.
Both of those rigs turned out to be going through repairs at dock and simply broke free.
Reply
Tony Belding 9:34AM (9/15/2008)
The real story should be the shutdown of refineries in the Houston area, which will take a while to bring back online. The logical result of that (via supply and demand) would be a decrease in the price of oil, since refineries are buyers of crude oil, but an increase in the price of gasoline.
And yet, if people see oil go down and gas go up, the cries of price gouging will surely become shrill.
Reply
JDred 9:40AM (9/15/2008)
It's not the off-line rigs that are the problem, it's the clustering of the refineries that were in the path of Ike and the resulting shut downs that are causing the jump.
Reply
gorr 11:03AM (9/15/2008)
Is this hurricane have push the price downward of windmills-produced hydrogen gas for cars and trucks and homes and machineries?
Reply
tankd0g 11:25AM (9/15/2008)
Heh, I wonder if the same energy companies that own the refineries had a bunch of windmills in the gulf producing power, would they lower the price because of the glut? lol Somehow I doubt that would happen.
Reply
meme 12:16PM (9/15/2008)
Very high storm winds are actually *bad* for wind turbines, just like for any other tall structure with a large wind-catching surface area.
meme 12:15PM (9/15/2008)
Ike did not cause "1%" of the rigs in the gulf offline. Ike forced 96.9% of gulf oil production offline, along with the evacuation of 76.9% of rigs and 78.4% of manned platforms. Ike set over 1% of the rigs in the gulf *adrift*. The big reason for spot gas price increases (note: *not* gouging) is the shutdown of the refineries. Thankfully, due to lower storm surge than predicted, damage to the refineries shouldn't be as much as was feared and capacity should start coming back online before too long.
Reply
stevefazek 12:32PM (9/15/2008)
2 things need to be mentioned. Yes priced went up 12-24 cents on average. Thats expected when production is down and supplies are starting to run low.
Yes most oil production will be back to normal some time this week.
So for 99% of the country there is no price gouging simple supply and demand.
For the people who are seeing 5 gas and prices that have gone up 33% in a day yeah thats gouging they will be punished simple dont buy gas from them and never again go to them. most gas stations arnt the only game in town.
Reply
John Rowell 11:07PM (9/15/2008)
Remember when Hurricane Katrina was blamed for a temporary increase to $3 gas ... and then the very next year gas was approaching $4. Trust me, in another year and a half you will wish gas was $5 ... because by that time it would have gone up to $6.
The good news is the rise in the price of gas will bring electric cars into the mainstream, just as it has brought so much progress on that front so far.
Reply
Craig Pitman 7:42AM (9/16/2008)
Gas here in Halifax, Nova Scotia is $1.43 per Litre, which works out to $5.41 per gallon. It's the highest in Canada here I think, although I don't really know why.
It jumped 12¢ a Litre when the Hurricane Ike stuff, so BEFORE all the craziness it was still $4.85 a gallon...
You Americans don't know how lucky you are... Although I can't speak for people across the ocean - I imagine they were wishing it was as cheap as ours.
Reply
arthur barkeloo 10:07AM (9/16/2008)
Do you know how many rigs were distored and witch ones oil or gas
Reply
Phil 12:27PM (9/16/2008)
I live in Knoxville. Everyone lined up on Friday to buy gas. Demand went up. We deserve the price hike.
Reply