Experts blame gas price hike on hurricanes in the Gulf

by Sarah Rice (srice@wsbt.com)

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By WSBT News1

Story Created: Sep 10, 2008 at 2:33 PM EST

Story Updated: Sep 10, 2008 at 4:35 PM EST

SOUTH BEND -- Gas prices jumped nearly 20 cents in the past couple weeks. Now both Indiana and Michigan have some of the highest prices in country.

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But the entire country isn't seeing these increases. It's happening in specific states, like Indiana and Michigan.

Thanks to the hurricanes in the Gulf, there's been a disruption in the supply of oil. This is significantly impacting the Midwest. That's why drivers are forced to pay more at the pump.

"I was going to fill up Monday and I didn't. And now I'm kicking myself in the butt," said driver Lora Williams.

Like many drivers, Williams cringed when she filled up Wednesday.

"It's ridiculous. From one day to the next the price jumps 20 cents. I don't understand," she said.

"It's $10 more now then it was a couple days ago to fill it," said driver John Robertson.

Notre Dame economics professor Tom Gresik says drivers can blame the high prices on the hurricanes in the Gulf.

Many of the refineries there are still shutdown from Hurricane Gustav. With Ike approaching, they won't be up and running anytime soon. Gresik says this creates a disruption in the supply.

"And it's a supply disruption that hits the Midwest hard partly because we have to import a significant percentage of our gasoline from outside the area," said Gresik.

If the refineries aren't operating, pipelines aren't either. This map from Marathon Oil shows Northwest Indiana and Southwest Michigan have fewer of them.

But there's another problem. Our area is also at the end of the pipeline.

"Those of us who are at the end of the pipeline are going to have to scramble to find gas from other sources. And that means that the distributors and the gas stations just have to pay more to get gasoline to sell to us," said Gresik.

That cost gets passed down to drivers. And for Williams, it's forcing her to cut back.

"Little trips for ice cream or dinner, we miss out on that because it's going in my tank," said Williams.

Experts suggest drilling off the East and West coasts. They say this would give places like the Midwest more options when hurricanes do hit the Gulf.

The price of crude oil is a global commodity. While we may have problems at U.S. oil locations, like the Gulf, other parts of the world are doing fine and that's what's keeping the price of crude oil down.

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