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Gas prices drop even as supplies tighten

Energy expert: Refiners holding the line until supply picks up

09:53 AM CDT on Wednesday, October 1, 2008

By Jeremy Desel / 11 News

Video
Gas prices drop even as supplies come up short
Sept. 30, 2008

HOUSTON -- The warnings prior to Hurricane Ike making landfall were pretty loud. Not that the storm was coming, but what the storm would do to the price of fuel.

Just like the early predictions for Ike, though, the forecasted gas prices have been a little off.

“Today, gas prices nationally are cheaper than before Hurricane Ike hit,” said energy expert Andy Lipow.

You'd never know it to see the lines at gas stations in the southeast United States. In some parts of the country, hours-long waits to fill up are the norm -- for now.

That's because the supply of fuel is tighter than ever, and there is not enough gas to go around. Nevertheless, after months of telling us that the tight supply was to blame for the ever-increasing prices, there's been no sign of price hikes since Ike came ashore in Galveston on Sept. 13.

“The reason that they all hold the line on price is they realize that supply is going to return in a couple of weeks,” said Lipow.

Some consumers are skeptical of that logic.

“I don't know if the gas companies are just trying to be nice to us now until we recover (and) then they'll stick it to us later,” said Houston driver Lisa Iglehart.

Industry experts said the supply problem is short-lived. They said it will only last until the refineries can get fully back up to speed. Which begs the question: Knowing that hurricanes hit, why don't refiners simply store away more gas to be prepared, just in case?

Sounds simple enough, but maybe not.

“It is expensive and refiners and traders and independent oil producers, like everyone else, have to go to a bank and apply for credit to carry the additional cushion,” said Lipow.

That's something they either can't or won't do.

 

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