The Auto Writer

It is an awkward thing to complain about gas prices when people in Texas, Louisiana, and elsewhere are trying to pull themselves out of the devastation caused by Hurricane Ike. The Texas sized storm slammed through Galveston this past weekend, leaving a trail of death, destruction, and power outages across the Lone Star State.

Power Out, Platforms Down

Days before Ike’s full impact was being felt, thousands of production platforms scattered across the Gulf of Mexico were shut down, with ten platforms destroyed. Getting the remaining refineries back online and restoring power to impacted areas will take at least a week, with a shortage of gasoline expected until then.

In my area of the country, Raleigh, NC, many gas stations weren’t waiting for new shipments to arrive before jacking up prices. Drivers who pulled up to stations expecting to pay one price, soon found themselves paying as much as fifty cents a gallon more as pump prices rose while they waited in line. Panicking consumers quickly drained some pumps dry, forcing several gas stations to shut down until fresh deliveries arrived.

Warning that the state would be taking a close look at price gouging, NC Governor Mike Easley announced that the state’s attorney general would investigate complaints about service stations who were charging “unreasonably excessive” prices for gas, promising to fine violators $5000 for breaking the law. Indeed, the state received more than 1000 complaints since prices began to jump on Friday.

A Temporary Spike Expected

For consumers whose main shipment of gasoline comes from Texas, which is much of the US east coast, gas prices are expected to soar to record levels as fresh shipments are delivered this week. Although the average price of a gallon of regular gasoline is just under $4 in most parts of NC, the wholesale price rose to $4.85 on Friday which will push pump prices up well beyond $5, perhaps as high as $6 until production has been restored.

Thankfully, a ray of light is beginning to shine as the price of a barrel of crude dropped to just below $100 in most recent trading. Once production returns to capacity and supply keeps up with demand, pump prices should return to pre-storm levels and are expected to drop to $3 per gallon or less by the end of the year.