$3 ($4?) a Gallon and Rising: Katrina Hits Energy Markets

Since Wednesday night, regular unleaded at the gas station across the street from my home has been going up an average of 10 cents a day, with faster price increases reported in many regions. By Friday evening, it was still rising, and I fully expect it to go up sharply, but I think it's safe to say that we as a nation have got far bigger problems on our hands.

Nonetheless, gas prices are consistently cited as a top concern of voters. Even with Bush's decision to dip into the Strategic Petroleum Reserve to try to offset prices, serious problems still remain. It wasn't just oil drilling platforms that were shuttered during the hurricane; key refineries, pipelines and ports are out of commission. When they will be able to reopen, much less return tofull capacity, is anyone's guess.

Do you think Bush was right to open the reserve? What do you think the administration should be doing to offset the effects of the storm on energy prices? Already, gas prices have tripled in the last four years -- any thoughts on this?

By Emily Messner |  September 3, 2005; 7:00 AM ET  | Category:  Misc.
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The question of the day is whether this will push the U.S. into mainsteaming alternative fuel sources for private and commercial transportation.

Europe and much of the world has had higher fuel prices than the U.S. for a while; in part to discourage fuel consumption and in certain countries because they were shipping the bulk of their fuel to the West. But they haven't quite made the switch yet, making them insufficient models for any sort of major fuel source change-over.

Alternate fuel technology has been available for quite some time in the United States, but it has been stifled for a variety of reasons.

I predict that changes in the types of fuel we consume will come sooner rather than later if the gas prices stay the way they are, and very slowly indeed if fuel prices "rebound" to a lower level.

I don't actually know which one to hope for, do you? Long-term economic and environmental benefits from switching to another form of fuel, or the short-term economic pleasure of having cash in the pocket again after filling my gas tank.

Hmm, maybe I'll go buy a hybrid (or more realistically, a bike) and leave it to the rest of you.

Posted by: Bob P. | September 5, 2005 03:52 PM

There is a guy here on the Gulf Coast who runs his Mercedes diesel on used cooking oil - as for me, I am going to have to get rid of my beloved suburban (nothing like having your kids ride in a different zip code!) and buy a good shoe-skate.

Of course, the way the weather looks for us lately, perhaps a boat might be in order. . .

Posted by: L.M. | September 5, 2005 05:02 PM

What I find very hard to understand is why the administration has not called the oil execs to a summit meeting at the White House to explain very clearly to them how their actions are negatively affecting the entire US economy. After all, President Kennedy did it with the steel companies and they voluntarily rolled back prices in the national interest. Isn't private responsibility what this administration is all about?

Posted by: geri Scott | September 6, 2005 02:00 PM

The rising gas prices were a reaction to major gas refineries and oil rigs being taken off line due to the hurricane. There were (and in some places still) gas shortages. But as the refineries and the major pipelines are brought back on-line, the prices are starting to go down again. If prices did not go up as the supply of gas went down, then the market would not have been working.

But there are things that can be done. Bush was right to tap the SPR, in fact he has been slow in this regard because he should have stopped filling the SPR a long time ago to combat rising prices. Second, he could halt (or better yet eliminate) the federal gas tax and encourage state governments to do the same with their state taxes. He can suspend EPA requirements that make it more costly to refine gas.

Complaining to oil execs about rising gas prices in a time when demand is high, supply was already tight, and a major storm takes out a region that provides 1/3 of our refining capabilities is silly.

Posted by: MDP | September 6, 2005 08:32 PM

The oil companies have raised their gas prices blaming the increase on the hurricane. Yet, they will continue to make profits in the billions of dollars while the gas station owners struggle. Bush needs to step in and put a cap on gas prices for all states.

Are the oil companies going to contribute towards the Hurricane Katrina relief effort? I would not mind paying higher prices at the pump if it was going towards a good cause.

Posted by: SG | September 8, 2005 12:40 PM

There is no gas shortage. It is an illusion created by oil companies. The same thing happened in the 1970s and it is happening again. There is plenty to go around, all around the world.

What needs to be tackled is gas gouging. There are so many unscrupulous gas station owners gouging people - especially in the hurricane disaster areas. Disaster victims are being forced to wait in line up to four hours and pay in some cases $6 a gallon.

What we need is legislation that has stiff penalties and jail time for those prosecuted for gas gouging. Those gas station owners should be be banned from ever owning a station again, fined heavily, and be forced to sit in jail (in the general population of course) for at least a year to think about what they have done.

Posted by: Jacki Whitford | September 8, 2005 12:53 PM

Does anyone remember in the 2000 debates will Al Gore, George Bush said he (George Bush) would pick up the phone and call the Middle East if there were an oil shortage or price increase. Can not find the record but he definitely said something to that effect. See what you can find.

Posted by: Phyllis M | September 8, 2005 03:21 PM

I partially agree with the comments of Jacki Whitford. If any gas station owner is price gouging he should be punished as they were following 9/11.

However, in this case it is the oil companies that are doing most of the price gouging and not the independent stations. Based on the exorbitant profits the oil companies have been making for the past several years they have been gouging for a long time.

Posted by: Tom | September 9, 2005 10:34 AM

High gas pump prices are not determined as much by the individual gas station operators as by those who make the stuff. True, price gouging is going on but not by all stations. When the wholesale price is set by the oil companies at a level of their choosing, the station owners are left without a choice. Federal efforts to lower gasoline prices should be directed at the oil companies first and to the last guy, the one who station, last.
Mr President, take the oil copmpany executives out to the woodshed and give them a spanking for their greed.

Posted by: Lester Brandt | September 9, 2005 01:33 PM

irish drunks rule

Posted by: bill | December 6, 2005 11:39 AM

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