Panic Pricing

This guy in Georgia went a little overboard. Not to say that there isn't a problem, however:

US gasoline futures surged to a record high on Wednesday after the Department of Energy reported a 500,000 barrel drop in gasoline inventories to 194.4m barrels as stocks fell for a ninth week in succession.

The September Nymex gasoline contract rose 17.2 per cent to $2.90, its highest level since opening in 1984.

“US gasoline prices are now in the process of the most dramatic spike ever seen,” said Kevin Norrish, analyst at Barclays Capital.

The inventory data covered the week to August 26 and does not reflect the impact of Hurricane Katrina. Although the US government attempted to calm the market by saying it would tap the strategic petroleum reserve, this move was seen as largely ineffective after the disruption to refining capacity caused by Katrina.

Traders fear gasoline prices could spike higher, as Katrina has left nine refineries idle and four operating at reduced rates. Analysts said reduced refinery output would present a major problem, with estimates of losses of between 20m and 40m barrels of refinery throughput.

Locally, things moved into panic mode in some parts of town; the Chevron up the road from me went from $2.83 to $2.99 a gallon overnight. At Cave Creek Rd. & Loop 101, there are three stations at the intersection there. The Circle K and Cobblestone are each at $2.99 while the Diamond Shamrock station remains where it was yesterday at $2.73.

Meanwhile, another mile down the road the usually-over-priced Mobil station at Cave Creek and Union Hills Rd. is sitting at $2.89 a gallon. That $2.64 I paid on Tuesday night that so irritated me at the time is looking more and more like a serious bargain!

[sigh]