Television pictures of tragic flooding in Louisiana, followed by higher gas prices in Atlanta.
Sounds vaguely it might be happening again.
If the scenario sounds familiar, perhaps you recall paying a king’s ransom for gasoline – or being unable to get any at all — in early September of 2005 when Hurricane Katrina and its devastating aftermath pinched supplies of fuel to Georgia.
Current prices are pretty low, by Katrina standards: the average price of regular gasoline in metro Atlanta on Thursday was $2.07 a gallon. Some gas was available as cheap as $1.75 a gallon.
And while the current crisis in Louisiana was not caused by a single, grand, memorably-named storm, the flooding is unprecedented and destructive enough to have shuttered at least one refinery.
And there goes that supply-demand equation – compounded by the speculation factor.
“Flooding in Louisiana certainly has the potential to cause higher gas prices in Georgia,” said Garrett Townsend, a spokesman for AAA.
For example, production was curbed at Exxon Mobil’s Baton Rouge refinery, the fourth-largest in the state, Townsend said. “That causes supply concerns in the market, which lead to higher fuel prices.”
The price of Georgia gas has been steady and if the situation in Louisiana eases quickly, it may not rise. But the potential is there.
Most of America’s refineries are in the southeast, many of them along the Gulf Coast. But the base price of gasoline depends on the price of crude oil. And on Thursday afternoon, crude oil prices were trading nearly $3 higher than Monday’s closing price of $45.74. That means the cost of producing gasoline is getting more expensive, even if supplies are plentiful.
A $3 shift in oil could mean an 8 cent-a-gallon shift in gas prices, Townsend said.
Georgia receives gasoline via a pipeline from Louisiana, Texas and Mississippi.
Back in 2005, the shortage sent prices rocketing until at least some stations were charging $6 a gallon for gas and the governor was warning against “gouging.”
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