Katrina
hits LB pocketbooks with skyrocketed
gas prices
By
Cristina Madrid
Online
Forty-Niner
Contributing Writer
Analyst predict that Hurricane Rita, Katrina’s sibling will rip through
Louisiana and Texas where many Gulf Coast oil refineries and offshore wells
remain, which may increase the price of gasoline.
According to the San Francisco Chronicle, oil prices recorded their highest
one-day dollar jump in history Monday, after Rita threatened to plow through
Houston, the oil capital of the nation.
Refinery offshore workers from Chevron Corp., Royal Dutch Shell PLC and BP
Amoco PLC have been evacuated from the Gulf Coast as Rita approaches, reported
the Los Angeles Business Journal.
Although the barrel has not reached its highest peak of $69.81, October promises
to raise the price per barrel to $67.39, a 7 percent increase since the last
two weeks.
The spike in the price of oil shouldn’t come as a shock, because reported
shortages at 10 Gulf Coast refineries reduced refinery capacity and led to
a decrease in the desired supply, reported national sources.
But the question remains, how will refineries in the Gulf Coast affect Long
Beach gas pumps?
Wade Martin, an economics professor at Cal State Long Beach, said natural catastrophes
such as Hurricane Katrina influence the price of gasoline because they affect
refinery capacity by reducing their ability to produce oil.
The
reduced supply and demand for gasoline
pushes the price up.
The average price of gasoline per gallon near the university campus is $
2.915, according to gasbuddy.com. Last week, prices posted $2.935.
The
drop in price
is reflected by record-breaking prices of $3 two weeks ago, and although
they are currently lower, the intensity of Rita and a new storm off the
Caribbean will influence barrel pricing,
reported the Washington Post.
If Hurricane Rita veers out to sea or toward Mexico, oil prices are said
to fall, according to analysts.
However,
if weather predictions turn out to
be
true and the hurricane hits Houston, the market will substantially rise,
perhaps going farther past the $3 mark.Texas
has 22 refineries along the coast where
Rita is expected to hit.
The Organization of the Petroleum Exporting Countries (OPEC), who has
ultimate control of the price of crude oil, is set to announce plans
of pumping
an extra two million barrels per day to offset the shortage.
Additionally,
the
federal
government has loaned oil companies 13.2 million barrels of crude
oil from the U.S. Strategic Petroleum
Reserve and sold an additional 11
million barrels.
CSULB economics professor Noel Johnson doesn’t agree with the government
loaning oil companies money or oil because these actions give “oil companies
poor incentives to be bailed out” when they could be investing their
own money rather than taxpayers’ money toward damages done to their facilities. |
