Isaac: Gas Prices Could Soar
By Quincy Vagell on August 25, 2012, 1:00pm
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Many of us remember when gas prices soared as Hurricane Katrina churned in the Gulf of Mexico back in 2005. Well, Isaac could potentially have a similar affect.
There are many oil refineries located in the Gulf of Mexico. The majority of these sites are across the northern Gulf Coast. When hurricanes threaten the area, some of the refineries close for a period of time and this can have an affect on gas prices, causing them to jump.
Hurricane Katrina caused the average U.S. gas price to jump 20%. Even though the average price per gallon was less then than it is now, a major hurricane in the same general area could cause gas prices to spike.
Gas prices topped $4.00 per gallon in Connecticut on Saturday, for the first time since mid-May. Although a 20% increase caused by Isaac is extremely unlikely, it only takes a small percentage, with such a high base price, to negatively affect consumers.
If gas prices rose only 10%, that would literally move prices from $4.00 per gallon up to $4.40 per gallon. There's no way for sure to know how high prices could go, but it all depends on the strength and the track of Isaac.
Right now, Isaac is expected to move into the northeastern Gulf of Mexico as a Category 1 or Category 2 hurricane. If this happens, gas prices probably won't be affected much. There are many more oil refineries near the Texas and Louisiana coasts, than there are near Mississippi, Alabama and Florida. Also remember that Katrina was a dangerous Category 4 hurricane in the north-central Gulf.
It's not just about the exact track though. It's also about speculation, hype and precaution. In this volatile economy, speculation seems to have a greater affect than it used to. If there is a slight possibility for a major hurricane to track towards the heart of the oil refineries, gas prices could go up dramatically.
What's the forecast?
The computer models are still in a bit of disagreement when it comes to the track of Isaac. There is good consensus that the storm will become a hurricane, but the exact track is still somewhat up in the air. Some new data from the GFS this morning indicates that Isaac may slow down in movement and approach the north-central Gulf. This would be disastrous for gas prices, as the strength and speed of the hurricane, combined with its track towards many oil refineries, would likely cause prices to soar dramatically.
Right now, a landfall anywhere from the New Orleans area, back towards the Panhandle of Florida is possible. Although Isaac could brush southern Florida and will likely pass near the Florida Keys, such a track would have little to no affect on oil refinery operations.
Right now, be prepared that gas prices could continue to rise over the next week or so. Combine a potential hurricane with a busy holiday weekend (Labor Day) coming up and it's certainly possible that gas prices could continue to climb,
Keep on eye on Isaac.
WXedge.com will continue to monitor the track and intensity of Isaac.
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