As recovery fromHurricanes Gustav and Ike continues in Houston and in other parts ofthe South, people trying to get back to work and normal routines arebeing hampered by a shortage of gasoline. The problem is most acute inthe Atlanta, Georgia area, but also includes some other importantsouthern cities like Chattanooga, Tennessee, and Charlotte in NorthCarolina.
Ken Medlock, an energy specialist at Rice Universityin Houston says the closing of refineries prior to the two hurricanescreated a shortage in the gasoline distribution system for many areas.
"We had sort of a double whammy [hit]. Gustav resulted in about 15percent of our nation's refining capacity being shut down, and Ikeadded another 19 percent. So, the fact that those storms were back toback means that for about three weeks, you had very limited refiningcapacity in this country."
Medlock says the Department of Energyis reporting the lowest gasoline inventories in the United States since1967. But he says the problem will not last more than another couple ofweeks, as crews get refineries back up and running at full capacity.
Anotherfactor that will help lower fuel prices is the decline in crude oilprices on the world market. The price for the most common benchmarkcrude fell below $100 earlier this week, but it rose back over $100after President Bush announced a renewed effort to get a financialbailout package through Congress by the end of this week. The U.S.stock market, which fell more than 770 points on Monday, regained someground Tuesday on the expectation that a deal will be approved.
KenMedlock says international crude oil prices follow these swings in themarket because they are influenced by expectations of demand forenergy.
"If the market really senses a full-blown financial meltdown,you will see crude oil prices dip, because, if that does occur, thenthe demand for crude oil should be a lot lower for some time to come,"he said.
Medlock says an economic recovery would produce higherdemand for energy and could result in rising oil prices. But, he notes,there are many factors influencing the price of petroleum, includingstrong demand in China, possible disruptions in supply and the value ofthe U.S. dollar.
Crude oil prices rose to over $140 a barrelearlier this year, but dropped dramatically in the past couple ofmonths. Economists say a slowdown in demand was one factor. Some saythe market has also responded to moves by President Bush and the U.S.Congress to open more U.S. coastal areas for exploration anddevelopment, since that could potentially boost supply in the yearsahead.