Serious Question cuz i have NO clue...

[Dirty Octopus™]

what do Hurricanes have to do with gas prices?

can some one that has a good knowledge of economics please explain this to me? id be truly appreciative.

[alpine_aw11]

I know they shut down oil refineries in Texas when Ike was coming, I would imagine that has a lot to do with it. And, this is a shot in the dark, but maybe oil tankers were held from coming here. Plus when people hear about refineries being shut down, they all rush to the gas station leading to price gouging. Gas stations can only hold so much, so they raise the prices if they know a rush is coming on.

[JDMJorgie]

VERY, VERY good point^

[Alan®]

what do Hurricanes have to do with gas prices?

can some one that has a good knowledge of economics please explain this to me? id be truly appreciative.

In a nutshell it's basic supply and demand. when a hurricane bears down on an area of major oil production, the companies take precautions for the sake of the lives of those working these rigs and refineries and shut them down thus shortening the supply of oil while demand stays the same so the price goes up. BUT THEN you also have to add in the media's bullsh*t which causes an even bigger supply in demand which causes the price to go even higher.

[stephen]

i know i'm a little late on this, but i recently found out an excellent explanation from my godfather (i asked him the same question). alpine & redGT is on the right path, but there's a little more to it. essentially, it is supply and demand, but it gets a little more specific.

let's take the last hurricane for example IKE. i'm not sure if anyone followed the oil trends, but the day after the storm hit, oil was down to $91 a barrel. in the southeastern region, regardless of the decline in oil prices, we were paying roughly $1.50 more per gallon, than new england states (which is typically more expensive than the south). my initial thinking was "if it's down to $91 a barrel nationwide, and the gulf gets hit...how come we don't just buy it where the north gets and keep our prices down?" well it's not that easy. the economic term is "HEDGING." hedging is basically where you pay for something in advance, and are kind of locked into it...like a contract (because it's money already spent). there's a number of different definitions, but the ideology is for companies/people to do it to protect their investment by minimizing future losses due to inflation & reductions in supply.

the southeast's direct supply of oil is from the gulf. due to our "hedging" deal, we're probably locked into gulf oil for the next 20yrs (random #...but it's a long time). not only did the gulf rigs get shut down, but you also have to consider trucking routes and pipelines that were shut down or damaged (the way the oil gets to refineries and gas stations)....like alpine said.

now you have all of these local gas companies, that aren't able to get fuel that THEY'VE ALREADY PAID FOR, and can't get it from anywhere else. without their primary source of making money, fuel companies try to maximize their profits and brace for the down time when they run out of fuel. did you notice that regardless of HOW HIGH the prices were, there were still stations that ran out of gas? the media does create a stir, and you still have people who are forced to run across state lines who also suck up all of the remaining fuel in the meantime (alpine & redgt were right on point).

this is exactly why off-shore drilling will not totally eliminate our oil/fuel problems. on average we have 10 major storms a year (info from cnn). that leaves the possiblity of our fuel prices jumping atleast once for every storm (10 times)...especially if fuel companies pay for it ahead of time. unless we find a MAJOR oil supply that WON'T be affected by nature AND that HAS ENOUGH to supply the entire country, the problem will continue to exist. alternative fuels man...alternative fuels....

[RandomGuy]

another side note is that gas stations have NO BUSINESS when they run out of gas

They'll do whatever to keep people coming in and out (legal or illegal)

It's their livelyhood

[ksniperfox]

another side note is that gas stations have NO BUSINESS when they run out of gas

i guess you dont visit QT...