Concern that gasoline prices were going to spike much higher because of the impact of Hurricane Ike on oil refineries in Texas sent many people across the US hurrying to local gas stations Thursday night and Friday to fill up their tanks. There was also concern that gasoline supplies might be temporarily interrupted because of the hurricane.
Gasoline prices rose sharply on Thursday evening and Friday morning, out of concerns that Hurricane Ike would disrupt or possibly destroy oil refineries in its path in Texas and Louisiana. Fears of disrupted supply or higher prices — or both — brought out lines of gasoline-buyers at stations all over the US.
Why The Rise?
The prices rose while Hurricane Ike was still in the Gulf of Mexico, and before any damage had occurred there. Why?
“Panic buying” is the short answer, said Step Hipple, a professor of economics at East Tennessee State University.
According to the U.S. Department of Energy’s web site, “If demand rises quickly or supply declines unexpectedly due to refinery production problems or lagging imports, gasoline inventories (stocks) may decline rapidly.” (Go to http://gaswatch.energy.gov for more information.)
Gasoline stocks may also decline rapidly when fears of a shortage cause “panic buying,” said Hipple.