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Isaac Causes Gas Prices to Rise

February 13, 2013 3 minute Read by Bernard L. Weinstein

Carol Hazard, Richmond Times-Dispatch Gas prices are in for a double whammy. They could shoot up 20 cents or more a gallon over the next week if Hurricane Isaac packs a powerful punch and keeps oil production shut down for an extended period in the Gulf of Mexico, according to an energy expert who spoke Tuesday during a visit to Richmond. Even it weren't for Isaac, gas prices would still rise a few cents like they always do during the last holiday travel weekend of the summer, said Bernard L. Weinstein, associate director of the Maguire Energy Institute at Southern Methodist University in Dallas. Nearly 925,000 people from Virginia are expected to travel this Labor Day weekend, up 1.7 percent from last year, according to AAA Mid-Atlantic. "In the worst-case scenario, the country could dip into the Strategic Petroleum Reserve," an emergency fuel storage maintained by the U.S. Department of Energy, Weinstein said before his presentation to The Rotary Club of Richmond at the Willow Oaks Country Club. About 75 people attended. If there is even a perception of a crude oil shortage, particularly this close to the presidential elections, "you can be sure President Obama will authorize tapping into the Strategic Petroleum Reserve," Weinstein said. The U.S. has the inventory. "What we don't have is a sensible energy policy," Weinstein said. Still, about 30 percent of domestic oil production comes from the Gulf of Mexico, and the effects of Isaac are being felt. Gas prices in the Richmond area rose 3 cents overnight to $3.61 Tuesday and are up 5 cents since Friday. Prices are up 26 cents from a month ago but still off from its peak of $4 a gallon four years ago, AAA Mid-Atlantic reported. Clearly, Isaac is behind the most recent run-up in prices, Weinstein said. Gas prices are affected by a lot of things: the economic crisis in Europe, saber-rattling in the Middle East, and the drought in the Midwest, which pushed up the cost of ethanol. But prices don't have to be as volatile as they are, Weinstein said. Read More


Author

Bernard L. Weinstein
Bernard L. Weinstein

Bernard L. Weinstein is Associate Director of the Maguire Energy Institute and an Adjunct Professor of Business Economics in the Cox School of Business at Southern Methodist University. He has taught at Rensselaer Polytechnic Institute, the State University of New York, the University of Texas at Dallas, and the University of North Texas. He has authored or co-authored numerous books, monographs, and articles on the subjects of economic development, energy security, public policy, and taxation. His work has appeared in professional journals as well as the popular press. He earned an A.B. degree from Dartmouth College and an M.A. and a Ph.D. in economics from Columbia University.

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