Katrina’s Effect on Gas Prices

Written by Nickel - 11 Comments

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I’m sure you’ve heard more than enough about the price of gas these days, so I’ll try to spare you the whining about how much I paid today (it was $2.77, by the way — a personal record, but far better than paying $3.39 at the station across the street). Instead, I thought I’d post a graphic that might shed a bit of light on why it is that gas prices are skyrocketing, particularly across the South and East.

The graphic below depicts the pipeline system that was most severaly affected by Katrina.

pipeline graphic
[Source]

This system delivers around 126 million gallons of gas, heating oil, diesel, and natural gas per day from Texas/Louisiana to as far north as New York. It’s been running well below capacity since Katrina hit so, if you’re like me and you live in an area that is fed by these pipelines, be prepared for gas price increases to be particularly bad in your locale until things get back to normal (whenever that may be). This makes me wonder what’s going to happen to natural gas prices as we get into cooler weather.

Incidentally, I’ve found myself manually switching the AC on/off during my daily commute in an attempt to run it as little as possible to improve fuel efficiency. Incidentally, if you keep your windows up and recirculate the air, the car remains pretty cool for quite awhile after shutting off the air. Anyway, I guess this means that $2.60/gallon is high enough for me to modify my driving behavior at least slightly. The funny thing is that I’ll probably end up wearing out the AC switch and incurring a major repair bill in return for a tiny amount in gas savings. Talk about penny-wise and pound-foolish! But I just can’t seem to help myself…

Published on September 1st, 2005 - 11 Comments
Filed under: Energy
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About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!

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Comments (scroll down to add your own):

  1. It’s up to $3.29 per gallon in Michigan. ;-(

    Comment by FMF — Sep 2nd 2005 @ 8:16 am

  2. Why run the A/C at all? I run it a couple times a year to keep it working, but except for highway driving I just keep my windows open. The increased drag is much less than you would suffer in terms of gas usage compared to running a/c.

    Comment by Blaine Moore — Sep 2nd 2005 @ 9:53 am

  3. I run the AC in the summer because I live in the South, and it’s very hot and humid. Opening the window doesn’t do much. Yes, I could just skip it and live with the discomfort, but I’d rather use it sparingly than not at all. Also, the weather has been moderating recently, so I usually don’t use it at all in the mornings. With regard to your comment on fuel efficiency, I’ve read several places that at highway speeds, the extra drag of open windows is worse that having the AC on, but that at lower speeds open windows are a better option.

    Comment by nickel — Sep 2nd 2005 @ 10:01 am

  4. I’ve read that even at highway speeds it is better, but either way (as commented above) I don’t keep my windows all the way down on the highway. I do have the advantage of living in Maine where it’s only really hot for a few months, but I did live in Florida a couple times (winter/spring and then a spring/summer) and I found I still just drove with my windows open and the fan on rather than the a/c.

    Comment by Blaine Moore — Sep 2nd 2005 @ 10:13 am

  5. 45 mph is where the breakeven point is, under 45 then you would rather have the drag, over 45, then the drag costs more than the AC.

    Comment by jim — Sep 2nd 2005 @ 12:53 pm

  6. $3.19/gallon here and climbing.

    I’ve come to not running the A/C as well … it’s bearable.

    How did that gas station keep supply with a $0.62/gallon price difference? I’d think that this station would be pumped dry in about 5 seconds! Almost all of our gas stations in our county are within a dime of one another.

    Comment by mbhunter — Sep 2nd 2005 @ 1:34 pm

  7. The low price was at Sam’s Club, which sits on a hill and their prices are not visible from the street. Their actual price was $2.82 with a nickel off for being a member. Who knows, maybe they’ve since been pumped dry. I also saw an intersection a little further along at which Exxon was charging $2.87 and BP was charging $3.39. The lowest price in our area is usually at Kroger, especially when you factor in the $0.10/gallon discount that you get for every $100 in groceries that you buy. They were out of regular unleaded by Monday night, and out of premium (and their gas station was closed) by Tuesday. Not sure if they’ve got gas again or not.

    Comment by nickel — Sep 2nd 2005 @ 1:47 pm

  8. I never understood how one station can be priced 30 cents more than another right across the street. Isn’t that obvious price gouging? Oh well, I just make the consumer decision to buy the lower cost gas. It just disturbs me a little.

    Comment by Financial Fruition — Sep 2nd 2005 @ 5:54 pm

  9. It’s not necessarily price gouging. I believe that gas stations usually set their prices based on what they paid for their most recent delivery. So if the market is moving fast (like this week) and gas station ‘A’ hasn’t received a recent delivery, then they might still be selling at a low(ish) price. If station ‘B’ across the street just got another load, and the wholesale price has gone way up, then they’ll be forced to charge more. If this is what was happening yesterday, then I’m amazed that station ‘A’ didn’t arbitrarily bump their prices up simply because the market could bear it, and they’d make a much larger profit.

    Comment by nickel — Sep 2nd 2005 @ 7:19 pm

  10. I find it amazing that any one part of the country fully relies on 1 distribution method. Each area of the country should be provided with gas resources from at least 2 sources. For example, the south should be supplied from the south and maybe the midwest or the west. Spread out the risk.

    I dont know if it is possible or not.

    Comment by YoungMiser — Sep 3rd 2005 @ 8:58 pm

  11. It’s been $4.50 in Japan for ages (plus all the highways are toll roads)…but then Japan has great public transportation and there is no need to drive if you don’t want to.

    Comment by SavingAdvice — Sep 9th 2005 @ 11:34 am

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