Early this morning, Hurricane Ike proceeded to tear up a broad swath of Texas. Damage is extensive with the full extent of it yet to be determined especially as the storm moves up the midwest of the United States which may lead to more flooding and more seriously, outbreaks of tornados.

Last week, Tropical Storm Hanna cruised offshore of North Carolina but we were minimally affected. Not so with Ike which is hundreds of miles away. The particular thing about Ike was its strike point, the heart of oil production and refining in the United States. Production can be easily made up on the spot market or even from released oil from the Strategic Reserve. But refining capacity can not especially as refineries were near capacity from some time.

So the refineries are now shut down and so too is the supply in the pipelines that convey product into the Midwest and East Coast regions. When this information was known to many people, panic set in around here as people thought that there will be no more gas available. Mad scenes at gas stations everywhere as people tried to fill up their cars. Gas stations immediately jacked their prices by a dollar a gallon to $4.50 before getting visits from the state police that were sent out to enforced the state’s no-gouging laws. Prices are higher, by 30 cents more than the beginning of the week but seem to be stable now at $3.80/gallon. 

Gas stations are quieter now. If anything else, everyone has topped up their tanks and there will be no crush at the pump for a few days at least. On the other hand, driving past pumps at Sheetz station, showed too that their tanks were dry for several of the gasoline types. Right now, both of our cars are fine with gas but we will need fill ups by middle of next week.

We should know by Monday on when the refineries will come back on line and start refining oil again. When a similar situation when Rita and Katrina hit back in 2005 in the same region, it took three weeks before prices came back from their spike. Can not see where this will be any different.