Gasoline traders suggest a Gulf Coast hurricane could drive gasoline to $6 a gallon. CNN Money reported:
Like any disruption to supply, when a hurricane takes out drilling platforms and refineries, supply and demand principles lead to a jump in crude oil gasoline prices.
But even before the start to hurricane season, speculative traders have started to send oil and gas prices higher in anticipation of a hit to supplies.
"We're already seeing a hurricane premium on gas of about five to 10 cents per gallon," said Alaron Trading energy analyst Phil Flynn. "Especially since Katrina, we've seen traders build that into prices."
Hmmm, everyone is talking about supply and demand. The Transportation Department recently shared data that U.S. drivers cut back their mileage by 4.3% or 11 billion miles. Prices have soared since then, so did consumers respond by driving even less? It would seem a nearly 5% reduction in demand would help bring down prices, not cause traders to foreshadow $6 a gallon gasoline. That is if supply is relative to years past.
It turns out our friends, the Saudi Monarchy, have cut back their oil pumping, even as they continue promising to add capacity. They could send another 1.5 to 2 million gallons a day our way, but choose not to do so. They could be holding it to calm supply fears should that perfect storm arrive along the Gulf Coast or the Strait of Hormuz. Will it be Hurricane George or Tropical Storm Olmert that sends gas prices through the roof?
Like any disruption to supply, when a hurricane takes out drilling platforms and refineries, supply and demand principles lead to a jump in crude oil gasoline prices.
But even before the start to hurricane season, speculative traders have started to send oil and gas prices higher in anticipation of a hit to supplies.
"We're already seeing a hurricane premium on gas of about five to 10 cents per gallon," said Alaron Trading energy analyst Phil Flynn. "Especially since Katrina, we've seen traders build that into prices."
Hmmm, everyone is talking about supply and demand. The Transportation Department recently shared data that U.S. drivers cut back their mileage by 4.3% or 11 billion miles. Prices have soared since then, so did consumers respond by driving even less? It would seem a nearly 5% reduction in demand would help bring down prices, not cause traders to foreshadow $6 a gallon gasoline. That is if supply is relative to years past.
It turns out our friends, the Saudi Monarchy, have cut back their oil pumping, even as they continue promising to add capacity. They could send another 1.5 to 2 million gallons a day our way, but choose not to do so. They could be holding it to calm supply fears should that perfect storm arrive along the Gulf Coast or the Strait of Hormuz. Will it be Hurricane George or Tropical Storm Olmert that sends gas prices through the roof?
