Gas prices are set to jump as Hurricane Ike bears down on Texas. Some parts of the country are already seeing motorists dash to gas stations to fill up ahead of the anticipated price spike, leading to shortages.
Bloomberg reports, "U.S. refiners are speeding up plant closures as Hurricane Ike gathers strength toward the Texas Gulf Coast, home to 23 percent of domestic oil-processing capacity. About 19 percent of U.S. refining capacity is being shut before Ike makes landfall today." Industry analyst Bruce Bullock told Bloomberg, "Ike is headed into the heart of the refining industry,'' and damage from the storm is expected to "come in flooding, and a lack of power for an extended period of time.''
The AP adds, "The threat of Hurricane Ike pushed gasoline prices higher Thursday, something Gustav failed to do, as the latest storm pushed toward the mass of petroleum refineries along the Gulf Coast." Worries over the supply of gas over the next several weeks "sent wholesale gasoline prices soaring Thursday. In particular, the wholesale price for gasoline produced on the Gulf Coast jumped to record levels between $4 and $5 a gallon-- a spike some analysts attributed to 'panic buying' over Ike's potential to disrupt fuel supplies."
What kind of sustained price jump we can expect to see, according to AP "depends largely on how long refineries remain shuttered after the storm passes. The average retail price for regular unleaded gasoline was $3.671 on Thursday, according to the Oil Price Information Service, auto club AAA and Wright Express." But analysts believe "prices could climb sharply in the Gulf Coast region -- 50 cents a gallon perhaps -- if wholesale prices remain at inflated levels for a sustained period."
The price "spiked 30% Thursday, or nearly $1 a gallon, out of fear of what Ike might do," according to the Detroit Free Press.
Fears of Ike's impact have led drivers in some areas to line up at the pump. Florida's Gainesville Sun reports people were "waiting in their vehicles or standing in lines inside gas stations Thursday. Those waiting for gasoline said they had heard from friends, family and co-workers throughout the day, some via e-mail and blogs, that gas prices would spike overnight." Some in line "said they didn't know why prices were supposed to increase, but they had decided to heed speculation and get gasoline Thursday at prices ranging from approximately $3.65 to $3.73 around Gainesville."
Kentucky's WKYX radio reported, "Police had to break up two fights" at a gas station in Mayfield, KY last night, "and at least one person was caught trying to steal gas."
But the price spike effect has not hit nationwide. It seems to be concentrated in the South.
The AP reports, "A North Carolina-based convenience store chain is asking customers in 11 states -- mostly across the Southeast -- to limit gasoline purchases to 10 gallons as Hurricane Ike shuts down some refineries on the Gulf coast." The Pantry stores are located in Virginia, Georgia, Florida, Alabama, Mississippi, Louisiana, Tennessee, Kentucky, Indiana and both Carolinas. The company's move was not necessitated by an actual shortage, but anticipation of one. "Emergency management officials in three western North Carolina counties said lines formed and some stations ran out of fuel Thursday after rumors of supply problems. The officials said there was no shortage."
Watch this space in the coming days for reports of damage in the region, and what to expect at the pump.
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