Gas Prices Soar in Wake of Katrina

One of the most widespread but least horrendous things Katrina has done relates to gas prices. The hurricane severely damaged 12 oil rigs in the Gulf, 5 of which will have to be scrapped. Eight major refineries that produce gasoline, diesel and jet fuel and heating oil were stopped last week and several more had large output cuts. That dropped the region's refining capacity by nearly 90 percent, contributing to a surge in retail gasoline prices and spot shortages around the country. 36,000 of the 55,000 oil workers in Lousiana lived in the direct path of the storm, which means that it will be a long, long time before all the oil plants are fully functioning. As a result, gas prices have shot skyward in tandem with the Labor Day weekend and the traumatic impact of Katrina. Costs at the pump quickly climbed to over $3.00 a gallon in most American cities, but in the areas close to Katrina's path even higher rates were a norm. A record $5.87 a gallon at a BP station was reported in Atlanta, Georgia. In most cases, the rising gasoline prices were simply efforts by the station owners to make sure they could afford the next shipment. In other cases, the stations were raising prices to avoid running out of gas. Jim Klun, the owner of a Marathon Petroleum franchise, dropped his prices Thursday, admitting that it had increased prices too much in the confusion that has gripped gasoline suppliers and retailers all over the country since Monday's storm. Dealers like Klun insist that they aren't trying to take advantage of customers. Typically, they keep only one to three days of supply on hand, and they claim that they have to raise prices to afford the next delivery of higher-price fuel. While there are no official price controls, laws in some states do place general limitations on gas price increases. Gas retailers say they frequently take the heat for huge price increases, but most are at the mercy of large oil companies that set the price they pay for their wholesale fuel. This makes a disaster like this one tricky for everyone involved. Mr. Klun said he consistently priced 20 cents over his wholesale cost. Even with gasoline prices at $2.99 the morning of the hurricane, posting a $3.69 price on Wednesday shook him like never before. "I've never been close to that," Mr. Klun said. In the light of this expanse of pump costs, many are turning to other sources of fuel. Take a look at this article that tells how diesel trucks actually can run on strained vegetable oil! In Him, D3