Gas prices have been in a downward slide for more than 40 days, but they are expected to rise through Labor Day weekend as Tropical Storm Gustav approaches the gas-refining region of the Gulf of Mexico. Forbes reports, "Analysts say any damage to oil and gas facilities - especially along the vulnerable Gulf Coast - could send retail gas prices spiking back above $4 a gallon." The national average price of a gallon of regular this morning hovered around $3.66, down from "the all-time high of $4.114 a gallon reached last month. But if Gustav does major damage to supplies, consumers could see that record shattered." Tim Kloza of the Oil Price Information Service tells Forbes, "If we have a Katrina-type event, you're talking about gas prices going up another 30 percent."
Gustav has already had an impact on oil prices. The AP reports, "Oil prices fluctuated sharply Thursday as Tropical Storm Gustav spun toward the Gulf of Mexico, with some traders fearing a disruption in supplies and others betting that the government would tap the Strategic Petroleum Reserve if needed. Either way, consumers were likely to see a hike in gas prices for Labor Day weekend."
More than 4,000 oil and gas drilling platforms dot the Gulf of Mexico, and most of America's oil refineries -- which turn the oil into gasoline, diesel and other fuels -- are located along the Louisiana and Texas coast. Many of those facilities have begun shutting down operations in advance of the storm. MarketWatch reports that as early as Wednesday, "Initial evacuations of nonessential personnel were beginning at offshore installations as the expected path of Tropical Storm Gustav made it appear more and more likely that the storm will plow through the central Gulf of Mexico's production infrastructure."
Though it isn't yet clear what facilities will be impacted by the storm, the AP reports, "Fears of disruption in energy production have already sent wholesale gas prices soaring by up to 40 percent in recent days, meaning filling stations will have little choice but to pass on those costs to consumers." Kloza told the AP "Prices are going to go up pretty soon. You're going to see increases by 5, 10, 15 cents a gallon" regardless of the storm's impact.
Those planning to travel for Labor Day weekend were already reacting to higher prices. USA Today reports, "More Labor Day travelers will hop on trains and buses this holiday weekend to avoid high gas prices and hefty airfares, travel experts say." Meanwhile, "The auto club AAA projects that the number of people traveling more than 50 miles from home by all modes of transportation will decrease slightly compared with last year."
Even once Gustav's impact is clear, hurricane season may continue to impact the price we pay at the pump. Bloomberg reports that the U.S. National Hurricane Center "also is monitoring Tropical Storm Hanna," which "may become a hurricane in the next two days," though its current path wouldn't take it into oil-producing regions.
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