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Subscribe to RSSWith miles of cars lined up for fuel after superstorm Sandy, it may come as a surprise that gas prices are actually down. John Hofmeister, former CEO of Shell Oil and founder of Citizens for Affordable Energy, explains why.
In the wake of Superstorm Sandy, there are long lines at the pumps in the Northeast, but gas prices are actually down an average 21 cents a gallon nationwide over the past two weeks. Sometimes it is tough to square images of the extended queues of people waiting for gas with prices on the sign at your local gas station.
Will gas prices rise for the rest of America because of Sandy?
To get at the answers and the big picture, TODAY had the former CEO of Shell Energy, John Hofmeister, currently CEO of Citizens for Affordable Energy, on the show to break it down.
The burning question: Why such a big drop in gas prices? Sandy was a major event for the many lives it took, devastated and changed. In terms of the gas market, though, there are bigger, longer-trending forces at work. The big one is seasonal demand. This time of year, for many months in a row, there is less driving in general. That pushes down prices across the board.
On top of that, looking out into the next year and beyond, it doesn't look like there's going to be a big ramp-up in demand for fuel use any time soon. That also keeps a thumb on the price of filling up at the pump.
Hold on a second, though: Prices shot up after Katrina. Why isn't the same thing happening with this major, devastating weather event? For one, Hurricane Katrina hit the oil-producing Gulf Coast, hitting production facilities and refineries with sustained damaging wind and water.
The wind didn't last as long and wasn't as destructive in the Northeast, and didn't hit a major supply center for the country. Pipelines and supply routes were disrupted on the East Coast, but that's more about delivery. That isn't as much of a factor on national gas prices as having the supply get impacted.
What about the long gas lines? How much longer will they last?
It all depends on when full power is restored, said Hofmeister. After that, it should take about five days for drivers to get resupplied and get demand back to normal.
It's that spike in demand that's the big factor right now.
"Odd-even was a good decision, because it reduces demand by mandate," said Hofmeister, referring to the gas-rationing ordered by New Jersey Gov. Chris Christie. Under the policy New Jersey gas stations can only sell gas to license plates ending in an even number on even days of the month and to odd numbers on odd days of the month.
"Fear drives the long lines," said Hofmeister. "Fear (that) when you need gas there won't be any. The drivers put excess demand on a system that is undersupplied."
As power comes back on, people finish digging out their homes and supplies return, that fear is likely to abate, and along with it, the lines at the pump.
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O h you mean NJ is using rationing? Isn't that a socialist ideal? Damn socialist loving krispy kream anyway...
The oil companies want to make so much per day. The NorthEast isn't using its normal amount, so of course the prices drop across the country, to get people to pump and make up for it. Simple supply & demand
Fuel distribution in the rest of the country has not been effected and because of an oil glut, prices had been dropping before Sandy. In the northeast, that distribution has been effected and those people are in a panic mode to obtain as much fuel as they can get as well as using it to keep their generators running. They are probably using more fuel to run chainsaws, and many trips to the store, so yea, supply vs demand. I am sure it won't not take long before fuel prices raise in the rest of the country to catch up with the big oil greed. I am so happy the Reps stopped the Dem's from taking away their $30 billion dollar tax break after they profited $62 billion last year - NOT!
Gas prices have dropped around here by about 80-cents per gallon in the last month. So can the right-wing explain to us why when gas prices spike that is an example of President Obama's failed energy policy, but when gas prices go down that is never an example of the success of his energy policy? You cannot have it both ways. Of course the truth is that Presidents have little control over short-term fluctuations in gas prices, so it was all anti-Obama rhetoric. You know, the same garbage your TV sets and radios have been filled with lately. Lots of right-wing Super-PAC lies.
Gas prices always drop beginning a few weeks before an election. After all the Petroleum companies don't want you to mad at them and vote in Democrats who would investigate price gouging by oil companies.
Under normal conditions, something like Sandy would produce a big jump in the price of gas that would last well beyond the actual crisis. We'd also hear how prices take a long time to come down because the oil bought during the crisis takes months to work through the system and get prices back down.
The reason why gas prices are so high are because of the spectators on Wall St.
They're worth at least a buck toward the price. If they forced people who buy oil to take delivery of it, that'd get the day traders out real quick.
spectators?
don't worry. once the election is over, the gas prices will shoot back up. They always do.
That's because the election is shortly before Thanksgiving and Christmas, the two largest travel holidays in the country. Between all the families driving, flying, ordering gifts, shipping gifts and cards, etc., combined with the higher fuel usage for heating, we use a LOT of oil in November and December. Higher demand means lower supply and higher costs. It has absolutely nothing to do with the election. It has to do with it being November. If the election was held in February, you'd see little fluctuation.
Boy you people are complete fools. The harbor in NY was closed, all of the terminals were closed. There is very little excess storage capacity in this country thanks to the tree hugging liberal Democrates. So where do you think the Northeast would have excess gas stored at? They don't because there is NO WHERE to STORE it. Unlike the midwest that is sitting on quite a bit do to most of the refining being done there and fewer tree huggers.
Your post makes absolutely no sense. Most of the refining is done in the southeast and eastern seaboard because oil can be more easily delivered to the seaboard cities. "Tree hugging liberal Democrates (sic)" have nothing to do with New Jersey lacking storage capacity.
Well if you use the brain God gave you it is pretty easy to figure out that if the Tree-huggers put up enough money and make enough noise about refineries and storage facalities they stop being built. Thus lack of storage capacity. So, here is the tough part to understand.When events like Sandy come along and you are literally living tank to tank and the harbor get shut down. BINGO there is no way to get more gas into the area because it is all gone!
Hey sniff test - the results are in and you stink!
WOW really - that hurts....
if consumption is down why are prices over 3$ and pushing 4$ but i keep hearing how prices are dropping but i don't see it 4 yrs ago gas was under 2$ a gallon today oil is basically the same price same hurricane season pirate losses are down wtf nothing but excuses we just need to get off the world market and take care of ourselves and put speculators out of the picture
"we just need to get off the world market and take care of ourselves"
So you're saying that we should nationalize the oil industry just like Venezuela, Iran, and Iraq? Either we sell oil globally (capitalism) or our government runs the oil industry (nationalization/socialism). Which one are you advocating?
Ten years ago, GM sent our troops into battle in
Afghanistan and Iraq in Humvees that GM Knew did
not have heavy enough armor to withstand the
explosion of an IED, and got hundreds of our soldiers
killed. Barack Obama rewarded GM with a Five Hundred
Billion Dollar Bailout. From Wallstreet Banks to
Wallstreet insurance companies to Wallstreet Mortgage
brokerages to Wallstreet credit card hounds,
time and again, we have seen Barack Obama reward
failure, with excuses and bailouts.
How many months did he sit on his hands and wait for
British Petroleum to stop the Deep Horizon oil spill?
It took a congressional investigation to stop him selling
arms to Mexican Drug Lords. It took another congressional
investigation to beef up security at our embassies.
Yes we Can has turned into Oh No He Di'n't.
We no longer reward athletes and pass them, just for
showing up in class, we no longer reward students and
pass them just for showing up in school. What kind of
lesson do we teach our kids, when we reward a president,
just for showing up at a disaster? Like the victims on
the Gulf of Mexico, the victims of Sandy are beginning
to realize that a president's presence, alone, is not
enough.
How long will the American voter reward failure; four,
more, long, years?
Have any of you thought about the fact that gas prices are coming down because Obama is using our reserves? He started that right before the elections to make people think his strategies are working. Wait until the elections are over and watch prices soar again.
wrong - do some research - Saudi Arabia is pumping more crude into the world market to off-set Iran's missing oil. China and the rest of Europe are consuming less due to their economies going farther into the tank. We are consuming less due to no one being able to afford vacations or extra trips. Oil is starting to flow out of the Dakota's. When supply stays high yet demand decreases price needs to come down in order to make it attractive for people to buy. As I stated earlier there is NO SPACE in the country anymore for excess supply. This is all common economic Supply and Demand folks. Obama has done NOTHING to Impact any of this. As matter of fact his INACTION has delayed cost moves like this from happening sooner!
I always thought most people in NYC don't have cars.