Got Gas?
Jack Marks
The last time you hit the pump, you may have noticed an increase in the price of gas, and for those of us that are encouraged to pay for our gas, this price increase can be quite alarming.
The devastating, tragedy of Hurricane Harvey that hit the city of Houston from August 25th to September 3rd. Although the storm has left Houston in ruins, its effect is not just being felt in Northeast Texas. Due to the epic flooding that Hurricane Harvey has caused, there has been a delay in repopulating the facilities producing oil, inhibiting the return to service of the affected refineries for weeks to come. In result, crude-oil prices are already down significantly on the sudden loss in demand from the region's refiners, and the price of gasoline is rising steadily. Thus, causing a shortage of gas in the Southern states especially.
Texas and the rest of the Southeast states are certainly most vulnerable as these states are primarily served by Gulf Coast refineries. The rest of the country has a large enough supply where the price will not increase as dramatically.
As for now, pipelines carrying refined products across the South to the North continue to operate but as it still continues to rain historic amounts in Houston it is very possible these pipelines could fail, and this worst case scenario could become a reality. If this were to happen you could see gas prices skyrocket and are “expected to accelerate” even more, to possibly over a 2 dollar increase.
Overall, gas is becoming more and more scarce especially in the Southeastern region of the United States. Catastrophic increases on gas prices could be on the horizon as Hurricane Harvey is leaving more than just physical damage. Be aware and prepared for the price increase as it may be necessary to find alternate means of transportation.
Works Cited
CBS/AP. “Death Toll Bumps up to at Least 63 amid Hurricane Harvey Recovery.” CBS News, CBS Interactive, Apr. 2017, www.cbsnews.com/news/hurricane-harvey-death-toll-flood-houston-recovery-harris-county/.
Domm, Patti. “Gasoline Prices Jump to 2-Year High, with More Increases for Drivers over Labor Day Weekend.” CNBC, CNBC, Jan. 2017, www.cnbc.com/2017/09/01/gas-prices-skyrocket-with-more-gains-expected-for-labor-day-weekend.html.
“Hurricane Harvey Causes Gas Prices to Skyrocket Across U.S.” Time, Time, time.com/4925539/hurricane-harvey-gas-price-increase/.
Kilduff, John. “Op-Ed: Gas Prices Could Rise by $1 per Gallon or More in the Wake of Harvey.” CNBC, CNBC, 2017, www.cnbc.com/2017/08/28/gas-prices-could-rise-by-1-per-gallon-or-more-in-the-wake-of-harvey-commentary.html.
This issue is extremely urgent and timely, in relation to right now. Americans are not used to a lack of resources; we always have an abundance of water or an abundance of fresh food. For the most part, our air seems fairly clean and our homes are sturdy. We rarely have to face hardships and if we do, they are referred to as “first world problems”. Because of Hurricane Harvey, the US - especially Texas - is experiencing a shortage of gasoline for vehicles, which is a major problem in our technological world. People drive around all day to commute and we use cars to virtually get everywhere. But now that Harvey hit, we have a decrease in gasoline supply. Many gas stations are closed and others are forced to charge a extremely high rate. Up here in southeastern Wisconsin, we probably would not even know what to do if we had a limitation of gasoline, let alone an increase in gasoline prices. Sure, we would pay the price, but if the supply ran out, we are out of luck. I bet this is how Texans feel and dealing with it is easier said than done. Your post about this crisis was written using effective reasoning regarding supply and demand; let’s hope that the gasoline prices don’t actually increase as much as your research said they would.
ReplyDeleteI have to agree completely with Kate. Our need for gas has increased greatly over time and it has gotten to a point where gas is almost a need. With how much people drive and move around a shortage on gas would create several problems. Gasoline is turning into an inelastic good because people will almost pay anything to make sure their car is full of gas ready for use. It will be very interesting to see what Texas does with their gas problems and as Kate said, hopefully the prices are not raised by as much as your research suggested.
DeleteI do agree and like that Kate has observed the way Americans live and how accustomed we are to having fresh water and food always readily available to us. Due to the natural disaster occurrence we have had to experience shortages that other nations may experience on a daily basis. It is very interesting to me how much supply and demand really affects our lives and ways of living and makes me wonder what it would be like to live in a different region of the world where the economy is not as much of a prominent aspect in their lives.
DeleteThis is a very concerning issue, and I agree that it will only become more of a a threat over time. Not only will the shortage created by the hurricanes last for awhile, but the timing of these storms means that just as people begin to recover and supply of gas begins to stabilize again, it'll be nearing the holidays where people are driving around a lot. As we approach holidays like Thanksgiving, the demand for gas will increase by a huge amount as people drive to meet up with their families, and when combined with the shortage of gas already stated in this blog post, the impacts of the gas shortage will be even more severe.
ReplyDeleteWith the amount of damage caused by hurricane Harvey and with the amount of possible delays they could face during the recovery stage, how long to you think it would take for the gas prices to start dropping back to what it was before? I think that the chance of other gas pump failures is very low but the thought of a 2 dollar increase is very scary. If this does happen how will all of the car company's and those that compliment them will be affected if people start to find other forms of transportation?
ReplyDeleteThis is a super concerning issue, especially with upcoming holidays and people evacuating the areas where these natural disasters have occurred, the demand for gas has never been higher. With the gas price increasing you could see a huge hit to your finances if these gas prices sky rocket anymore than they already have. Gas, being an inelastic good meaning that no matter what the price is raised or lowered too, it is a need and will have the same amount of quantity supplied. This is truly an epidemic and needs to be taken care of immediately to prevent from any long term damage in a finical state for gas stations. The increase in price really is bad for us consumers, but if we where ever to run out of the supply of gas completely for a period of time, we could really see some serious economical problems as lots of transporting companies and suppliers need gas to transport their products to the consumers.
ReplyDeleteI agree, Benjamin. Hurricane Harvey was a tragic natural disaster for the economy in many different ways. The economic disaster increased gas prices which effects tons of different people and industries. For example, truck companies like FedEx are effected because now the trucks have to pay a lot more gas to travel across the country. In addition, everyday people going to work will have to spend more of their income on gas. On the flip side, the gas companies will boost in revenue as they are making tons more money off their gas.
DeleteThis problem is very urgent to the southeastern states and it is also effecting the rest of the country. With the gas prices rising almost 2 dollars, it will effect the economy greatly. What do you think the car companies will do if people start to use alternate forms of transportation? I think the car production and demand will decrease because people will realize buying a car and having to pay that much for gas, will ultimately be more expensive than taking a bus or train. But also, when do you think the gas prices will be back to normal prices? If they drop back down, they demand for cars will increase again and be back at the top of the market for transportation. But if that happens, bus and train station owners will be back to what they were making before the hurricane struck.
ReplyDeleteTexas is the United States number 1 supplier for crude oil, bringing in around 36% of the total production. With that large of a section of the supply now down, it is taking a huge hit on both suppliers and consumers. Since gas is a relatively inelastic good, it takes a hit on consumers, and they don't have choice. It will take time to rebuild and get the refineries back up and running, but prices will eventually drop back down
ReplyDeleteTwo dollars is a very large increase for gas! As a licensed driver myself, I already struggle to pay for my own gas because transportation is huge need in my every day life, almost always in a car. I think that if a price increase this large occurs, the increase in demand for other forms of transportation such as trains, subways, buses, etc. will increase. I also think that there will be an increase in demand for more fuel efficient vehicles. How will this large increase in gas prices affect the bus fares? To drive a bus the bus company has to purchase gas to fill the bus, but will the increase in demand cover it? If they increase the bus fares, would the opportunity cost be greater than just paying for your own gas? These are all questions that will need to be discussed if a change this drastic were to occur.
ReplyDeleteThe Hurricanes will continue to affect the US economy for a long time. If the price of gas increases by 2 dollars, imagine how long it will take for gas prices to fall back down to normal levels. It will take an extended period of time for the infrastructure to return to normal so gas can be produced as efficiently as before.
ReplyDeleteMore than 50% of the natural gas used in the US is produced is produced in southern states that were affected by the storm with the exception of Wyoming. This could mean that temporarily the US may have to rely more heavily on importing natural gas. However, there is no guarantee that this will have much effect anywhere but in the South, for the longevity of the hurricane and the repair times is unknown.
ReplyDeleteAs with any natural disaster, there will be major side effects. The recent hurricanes striking the southern states of the US left many states with no way out and families fleeing. It is very interesting how many families flood the hazardous southern states and created lines of cars waiting for gas at the gas stations yet the gas prices have still jumped up an entire $2! As Chris mentioned above, I will be very curious to see how long it takes for the “normal” price of gas to return if it leaped two whole dollars in such a short amount of time.
ReplyDeleteA 2 dollar increase is huge! That would add up very fast. Do you think that this increase in price will force consumers to substitute another product for gas? This increase might entice consumers to switch to more fuel efficient or chargeable cars. Especially because, as you said, gas is becoming more scarce as we use all of the natural resources available. Soon, the quantity supplied will be much lower than the quantity demanded, also driving up the prices to exorbitant amounts.
ReplyDelete