Oil Refining: Minimal Damages from Rita

Many news articles are stating that because of a shift in hurricane Rita's pattern from a direct line into Huston with a movement more towards the eastern portion of Texas, our nation has been saved from another massive increase in gas prices. The United States Coast Guard preformed and aerial assessment of the refiners in the gulf and determined that there was no severe damage done to the refineries. According to the MSNBC article by John Schoen the longest period of any refinery being shut down is one month and many of the others will be up in running in less than two weeks. Even thought the refineries will return to normal production soon there is still predicted to be a slight increase in gas prices once again for a short period of time. Bush stated that more oil reserves can be released if needed and I hope that all measures are taken to lower gas prices or keep them the same as what they are currently until the impacts of Rita are reconciled.


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Bob said...

It seems that due to minimal damages to the refineries we shouldn't see gas prices go up. My concern is that now that prices are higher than we have ever seen, can we excpect to see them go back to normal after hurricane season is over and everything is back to normal? I think gas companies will continue to keep prices high, and when they go down to $2.70 a gallon we will be relieved, when in fact they should be going down to below $2.50 a gallon.

Ann said...

As long as we have a growing demand for gas, prices will go up, regardless of refinery damage. Our refineries are at 100% capacity right now. They were at that capacity before hurricane Katrina. Until we get more refineries, our gas prices aren't going to drop much. The problem is, who wants an oil refinery in their backyard?

Nate said...

I agree with Bob, what will be a reasonable price? Will we be so happy that gas is now $2.50 when before the hurricane gas was below that level anyways and we were complaining. I for one feel that the taxes that are placed on the oil is what is driving the prices so high. Also the oil company knows that they can get that much for a barrell so they continue to charge it. The only thing that will actually drop oil prices is the demand that we as consumers place on it.

ethan said...

In Utah the taxes are $.42 per gallon. If suppliers could get gas at $2.00 per gallon we would still pay $2.42. In 1980 gas averaged $1.05 per gallon. They in 2002 it was down to 95 cents for the national average. This shows that it is possible for prices to go down. I just don't think that it is very likely.

Dr. Tufte said...

-2 on Tyler's post for multiple spelling errors.

-1 on Nate's comment for a spelling error.

-1 on Ethan's comment for poor grammar.

Also Tyler, could you make the link more informative - like have something about oil prices in the link itself?

The point that many people in the media are getting close to, but haven't hit on well yet, is that oil prices didn't used to be sensitive to hurricanes. They are now because we've pushed that industry to its limit.

Bob is off a bit. Gas prices are higher than they've ever been in nominal terms. In real terms, they are only now after the hurricane and the run-up of the last two years approaching all times highs.

Nate is offbase too. Taxes haven't changed recently, so they can't explain the run-up in gas prices. Of course, that isn't the same thing as us all wanting the taxes to be lower.

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