Hurrican Katrina aside, can someone explain to me the jump in gas prices?

[knaidel]

I understand that the price of crude oil is rising per barrel, but what causes the rise? I feel a little silly asking this, but I'm not really sure I understand it all. Gas prices have been rising throughout the past year, but it's only been in the past few weeks, that they're REALLY high...can someone explain the economics behind it?

[lilycat88]

Not much help on the past few weeks but the issue with Katrina is multifaceted. First, 40% of the US refineries are now shut down. Louisiana and the gulf coast is huge in the refinery business. So, no oil can be turned to gas thus the supply is cut. Second, the ports are shut down. Baton Rouge is the home of the busiest "oil" port in the country. So, nowhere for the oil to come in to be turned to gas. Also, the oil drilling rigs in the gulf are shut down currently so no domestic oil is coming from that area. Being in the midwest, we're also screwed because much of our gas supply came "up" the Mississippi and with the river such a mess, shipping lanes are closed. So, it's a supply and demand issue. Until they get the rigs pumping and the refineries refining and the ships shipping, the gas supply is dimished. Law of supply and demand leads to higher prices.

I'm sure the generally overactive hurricane season hasn't really helped things in general.

Jamelin
Mom to Susanna born 6/29/2004

[bostonsmama]

Very well said, and add to it the fact that the price per barrel of crude sweet oil is a comodity traded in the stock market, and that fear and speculation about the future has a lot to do with the ups and downs of prices...thus, the stockowners who trade up or down invariable inflate or deflate the prices. The hurricanes are having a big impact on the emotional concerns of stockowners who know want the price to match the supply and demand (there's some economics for you!)

Ugh, is this my 1000th post?

Larissa
who is still trying to give birth so she can have more to say

[mudder17]

Congratulations, Larissa! :) Hmm...looks like I should have filled up two days ago, sigh.


Eileen

http://www.mothering.com/discussions/images/smilies/candle.gif for Leah

http://www.gynosaur.com/assets/ribbons/ribbon_emerald_18m.gif , 18 months & counting


http://tickers.baby-gaga.com/t/catcatcvi20040222_4_Kaya+is.png

[bostonsmama]

Thanks, Eileen. It's bittersweet....on the one hand, I'm so glad to have come to know the great ladies of these boards, had support through the loss of my pregnancies, and learned so much about children's product and child-rearing that I'm a resource for my friends with living children.....but on the other hand, there's a sadness in my heart b/c I thought for sure I'd be able to announce that I was pg again by my 1000th post.

Sigh....in God's timing.

Larissa
who is still trying to give birth so she can have more to say

[kijip]

Uncertainity about the situation is the Middle East and the war in Iraq is a big driving force and clearly existed prior to Katerina. Katrina has just made it that much worse. President Bush is considering releasing some of our reserves to keep some refineries in operation now that deliveries are shut down due to the hurricane. That should help somewhat. As Larissa said, it is very much a matter of perceptions on the part of traders.

Oil was briefly at $70 and is now slipped a bit.

[mudder17]

Hugs, Larissa! We're still praying for you! And child or not, I consider you one of my dear friends on these boards!


Eileen

http://www.mothering.com/discussions/images/smilies/candle.gif for Leah

http://www.gynosaur.com/assets/ribbons/ribbon_emerald_18m.gif , 18 months & counting


http://tickers.baby-gaga.com/t/catcatcvi20040222_4_Kaya+is.png