Gas Prices Going Up Again

It's been less than 12 hours since Hurricane Ike made landfall in the Galveston area, and gas prices are going up again.

"According to a nationwide survey released by the AAA Saturday," writes CNNMoney.com, "the average price of regular unleaded gasoline edged up 5.8 cents to $3.73 a gallon, from $3.675 a day earlier."

Gas shortages are expected because so many Gulf Coast refineries had to shut down.

President Bush says federal officials are monitoring what's happening and will step in if it appears that anyone is trying to take advantage of the situation.

"[T]he Department of Energy, the Federal Trade Commission and, I know, the state authorities will be monitoring the gasoline prices to make sure consumers are not being gouged," Bush said in a brief televised statement this morning.

Last night, the Houston Chronicle reported that the severity of the storm would determine "[h]ow soon refineries can start back up, tanker trucks can fill up at terminals and new supplies reach retailers."

It's still too early to know when that will be.

But this much is for sure:

• One of the refineries is the #1 domestic supplier for the United States, and many of the other affected refineries play significant roles in U.S. energy supply.
• Production and supply experts were telling CNN this afternoon that, even if the shutdowns are temporary, it will be days, if not weeks, before they can get back up to normal capacity.
  
  The restoration of power to the region will have a lot to do with how long the refineries remain shut down.

For the distribution points that depend on those supply lines, it is said that $4/gallon gas is back on the horizon.

Gustav Makes Landfall

Late last night, I reported what I was hearing from WeatherNerd, which indicated that Hurricane Gustav would not hit New Orleans with the kind of intensity that had been predicted.

This morning, WeatherNerd reports that Gustav is a Category 3 storm, rather than the Category 2 it was predicting last night.

Nevertheless, WeatherNerd asserts, Gustav is really a Category 3 in name only.

And a statement from the National Hurricane Center about four hours ago said that Gustav "is not strengthening" and called its then-estimated wind speed of 115 miles per hour "generous."

According to the most recent information from the Weather Channel, Gustav has, indeed, been downgraded to a Category 2 storm. At 8 a.m. Central time, it was reported to have a wind speed of 110 mph and was moving northwest at 16 mph.

In fact, it does not appear, at this point, that Gustav will be as severe as it was predicted to be only a couple of days ago.

It's always risky to predict what a storm like this will do.

Considering New Orleans' position in relation to sea level and the precarious nature of part of its levee system, some flooding appears inevitable.

And, in a hurricane, it is almost inevitable that some lives will be lost.

But the city looks like it will be spared a repeat of its experience after Hurricane Katrina. Loss of life and destruction of property do not appear likely to happen on a Katrina-like scale.

And, if that's really how it plays out, then the next question to be answered will be this — how will offshore drilling rigs and land-based refineries hold up?

Because if they are damaged, a nation that has already weathered the storm of rapidly escalating gas prices this summer will face another round of price hikes.

And they might not go away soon.