News
Gas prices approach $4 a gallon
By Peggy Blackburn and David Goodwin
Email this story |
Print this story
Afrenzy akin to the run on banks during the Great Depression swept through the Southeast Thursday evening and Friday. Despite announcements cautioning against panic, motorists queued into lines at gas pumps in the wake of rampant rumors of potential gas shortages and possible $5 per gallon fuel.
And while oil prices were at $102 per barrel Friday ” down from a record high of $147.27 in July ” wholesale prices rocketed to new heights in the Gulf States.
The panic apparently began following Internet and national television reports that wholesale prices in the Gulf Coast area had increased from less than $3 per gallon Tuesday, then to $3.25 Wednesday and $4.75 Thursday. Those figures were provided by the Oil Price Information Service (OPIS), a market research firm.
Speculation and trading involving oil prices escalated Thursday as Hurricane Ike swept across the Gulf of Mexico resulting in decreased production at oil rigs, refineries and pipelines. Those operations account for approximately 97 percent of crude production in the Gulf, according to information from the Minerals Management Service of the U.S. Department of the Interior.
In Wetumpka, retail gasoline prices soared from a range of $3.55 to $3.59 early Friday morning to a virtually across-the-board $3.99 shortly after lunchtime.
“What’s happening is the refineries are shutting down and there’s no gas in the pipelines,” said Dean Mack of Turner Oil, a Wetumpka-based company that was among the last to post a price hike. “We’ve heard that our next load will go up 50 to 60 cents a gallon, and stations are increasing their prices so they’ll be able to pay for the next shipment.”
Mack said his company will try to keep prices as low as possible in the face of the increased costs.
“I’ve heard some companies won’t be buying gas at the higher prices and will just shut down their pumps when what they have is gone,” he said. “If we can get it, we’ll have it for our customers.”
He added that he believes increased drilling in the United States will help prevent situations like the current one ” and lead eventually to an overall cost downturn.
“When we have more drilling here, the other oil-producing countries like Saudi Arabia will have to keep their prices lower because we won’t be so dependent,” Mack said. “Of course, that’s just my opinion.”
Wetumpka resident Joanna Nobles filled up her car’s gas tank around lunchtime Friday at Murphy Oil on U.S. Highway 231, as five or six cars lined up behind her.
The $3.79 per gallon price tag “ up nearly 20 cents in the last few days “ didn’t seem to faze her.
“I’m filling up before they run out,” Nobles said. “I heard they’re already out at a station in Millbrook, and they say all the refineries are closed. Better get it while I can.”
But Nobles’ reaction to Hurricane Ike ” shared by thousands of motorists across the Southeast ” is exactly wrong, according to Clay Ingram, a spokesman for AAA Alabama.
“There are a lot of rumors of dollar to dollar-and-a-half increases; rumors of gas shortages,” Ingram said. “But 99 percent of the time, those rumors are untrue, unfounded and they don’t happen.”
There are price jumps in places, Ingram said, but “there’s no reason that I’m aware of why we should see big increases.” There are some “hiccups” in getting gas from the Gulf into the normal distribution channels, but that drop to “roughly 75 percent” of capacity is due to Hurricane Gustav, not Ike.
“Ike hasn’t done anything yet,” Ingram said. ”The only effect is that they had to evacuate people from some of the pumping platforms in the gulf, and the refineries on the Texas coast.”
But while oil and gas workers are hunkering down with their families, “a number of those facilities are being operated remotely,” Ingram said.
“The people are gone, but a surprisingly high number are still in operation, being run remotely,” he said.
The gasoline supply shortages are isolated, Ingram said. When they do occur, he added, “the reason is panic-buying”
“The rumors about shortages are mostly untrue, but they cause people to go out and fill up all of their cars and all of the gas jugs in their garage; if enough people do that, the stations are going to run out,” Ingram said. “When one station runs out, the word will really get out, and more people say ‘uh-oh, we better all go fill up our tanks,’ causing more stations to run out, and causing even more panic.
“It snowballs in a bad direction.”
While some may worry that gas stations are “gouging” them, Ingram said price gouging ” in the sense of Alabama law ” does not exist unless Gov. Bob Riley declares a state of emergency.
In Alabama, he said, there has to be an officially declared state of emergency before price gouging can occur.
“Without that,” he said, “there’s just no such thing.”
Even if the governor did declare a state of emergency, the suspected gouger’s price hike must be 25 percent or more above the last six months’ average price, which works out to just under $1 per gallon.
“But without a state of emergency, that’s all irrelevant,” Ingram said. “Store operators are free to price their fuel at whatever the market will bear.”
Such gouging is unlikely, though, because the per-gallon price has very little effect on a retail gas seller’s bottom line. Local gas stations make most of their profits off of merchandise “ drinks, candy, beer or cigarettes.
“And folks know if they have the highest price in town, they won’t sell anything,” Ingram added.
Despite Ingram’s assurances, prices have increased sharply and stations have run out of fuel ” and not only in Alabama. In North and South Carolina gas costs jumped as much as 70 cents overnight. And Friday in Tallahassee, Fla. regular gasoline was selling for as much as $5.49 per gallon, although the price in other areas of that state were about $3.67.
