Ike Strikes, Gas Prices Spike; Hurricane Ike Driving Up Gas Prices Nationwide

Hurricane Ike rolled onto land at 2:00 a.m. September 13 as a Category 2 storm, bringing with it a massive storm surge, including some waves reaching 25 feet in height. Many watched the coming and passage of the hurricane on the news networks and on live feed cameras on dozens of websites like hurricanetrack.com. and local webcams from Galveston.com. And although the water has risen and wind and water damage looks to be extensive, thus far the death total has remained low (three).

But Hurricane Ike's more disastrous effects may be economic in nature. The Texas and Louisiana Gulf Coast is home to a third of the United States' oil refining capacity. Depending on the damage sustained and how long the shutdowns continue, consumers across the United States will suffer from anticipated shortages. Some will be preyed upon and will experience gas gouging.

Gas Prices On The Rise

Gas prices began to rise on September 12 as the demand for gasoline began to become more noticeable. Lines began to form at many gas stations nationwide. Anticipation of rising gas prices following the shutdowns and possible damage from Hurricane Ike motivated millions to gas up before the higher prices were imposed.

Local retailers, in turn, began raising their prices as the demand became greater and to anticipate the rise in prices from their distributors. Some gas prices have risen a dollar or so within 24 hours. A look at gas prices on GasBuddy.com shows a range of gasoline prices in San Diego, California from around $3.50 per gallon to around $4.70. The same range can be found in the Atlanta, Georgia area, with the highest prices reaching around $4.60. Dallas, Texas, which is a few hundred miles from the Gulf Coast sees prices ranging from $3.30 to $4 per gallon. In Miami, prices ranged from $3.60 to $4.25. In New York City, prices varied from $3.60 to $4.10.

CNN reported that one consumer in Memphis watched a station employee literally raise the price of gas at the station they were at by 60 cents.

This writer, a resident of metro Atlanta, saw the price of gasoline jump 50 cents at the nearest gas station within the space of six hours. As previously noted, the Atlanta metro area has prices ranging from $3.50 to $4.60. Lines weren't long (one or two vehicles) but all the pumps were being accessed continuously, even at multiple island stations and convenience stores.

Within a matter of hours, the falling price of a barrel of crude oil on the world market and the subsequent lowering of gasoline prices over the past several weeks had been erased in many areas.

Gas Over-Pricing or Gas Gouging In The Wake Of Hurricane Ike

It is during times such as these, when demand remains the same or intensifies and supplies are curtailed or lessened, that many retailers and distributors are tempted to gouge the public by raising prices precipitously and unfairly. Evidence of this type of unfair trade practice seems to occur every time a natural disaster or state of emergency prevails. The unscrupulous seem to never tire of taking advantage in times of need.

ABC News reports incidents of gouging in South Carolina and Florida occurring already. Some stations in South Carolina have raised thier prices above the $5 mark. One station in Tallahassee, Florida has been reported to be charging $6 per gallon. With 97% of Gulf oil production shut down and 93% of refineries shut down (according to the Department of Energy), heightened prices and gas gouging are likely to become even more prevalent.

Wholesale gas prices rose $1.50 in one day, making it the largest single day wholesale price increase since 1973, which occurred during the Arab Oil Embargo. Some experts believe that if wholesale prices remain static, retail gas prices could top $5.25 per gallon.

Ben Brockwell, a director at the Oil Price Information Service, told The Associated Press, "The path of the storm has put the entire supply chain under stress from the refinery level all the way to the retail station level. Hopefully, it's a temporary phenomenon, but we won't know until next week."

Gas Gouging Laws

Exploiting the public is nothing new, but doing so during times of local or national trouble or resource shortage shows a callousness and human indifference that is beyond description. But it is anticipated.

North Carolina Governor Mike Easley enacted his state's gas gouging law following Hurricane Gustav and in anticipation of Hurricane Ike on September 12. Disruptions in the supply pipeline prompted his action.

Kentucky Governor Steve Beshear declared a state of emergency on September 12 to stop gas gouging in his state.

In the state of Georgia, Governor Sonny Perdue signed an executive order against price gouging on September 12, which effectively enacts the state's laws against raising prices too high during times of emergency.

State governments are moving to protect the consumer across the United States. It still will not stop the opportunistic.

In the coming days and weeks, incidents of price gouging will occur. If gas gouging is suspected, consumers are advised and encouraged to call or e-mail their respective state's attorney general's office.

Sources:

GasBuddy.com
CNN Television
ABCNews.com
Associated Press
Newsobserver.com
Bizjournals.com
WRDW.com