Gulf Coast gas prices spike
Gas prices jump overnight in Mississippi and other Gulf Coast states over fears that Hurricane Gustav could threaten oil supplies.
NEW YORK (CNNMoney.com) -- Gas prices jumped overnight - and are expected to keep rising - in states along the Gulf of Mexico as offshore oil rigs prepare to abandon ship ahead of Hurricane Gustav on Friday.
The price increase was most dramatic in Mississippi, where the statewide average for unleaded gasoline rose nearly 7 cents a gallon on Friday, according to the motorist group AAA. Gas rose by more than 9 cents a gallon in the coastal cities of Biloxi, Gulfport and Pascagoula, said AAA.
Gas also rose by about 3 cents a gallon in Louisiana and Alabama, by nearly 2 cents in Texas, and by about 1 cent in Florida, according to AAA. In New Orleans, gas prices rose nearly 5 cents a gallon. All of these areas are dependent upon oil rigs in the Gulf of Mexico as a major part of their oil supply.
In comparison, gas prices declined overnight in New York, New Jersey, California and Alaska, states that are not directly dependent on the Gulf.
"Prices are more affected down South, while New York is supplied through [New York] Harbor," said Fred Rozell, oil analyst with the Oil Price Information Service.
Rozell said these increases are particularly painful to Mississippi, not just because the price increases are the most dramatic there, but because it's a state where people tend to have less discretionary income.
"I think some of those areas are going to get hit hard again and it's really going to squeeze people," said Rozell.
Get ready for high gas prices: The price increases are likely to continue, said Rozell, partly because of the storm, and partly because of recent increases in wholesale gasoline prices, which tend to lead retail prices. Rozell expects prices nationwide to increase by 10 cents a gallon over the next five to seven days, or by 15 to 25 cents in the Gulf Coast states.
Hurricane Gustav smashed into the Dominican Republic and Haiti on Thursday, killing more than 50 people and causing extensive flooding. The storm headed west and whipped into Jamaica at midday on Friday. The storm is expected to crash through the Caymans and Cuba as it heads for the Gulf of Mexico, where it could possibly build to hurricane strength and smash into New Orleans and the surrounding region early next week.
If the storm continues along its projected course and builds strength, it could threaten the 4,000 drilling platforms and 33,000 miles of pipeline in the Gulf Coast, which sends 1.3 million barrels a day to the Gulf Coast's 56 refineries.
"We are seeing [gas price] increases here that are based on the possibility that there may be some supply dislocation," said Peter Beutel, oil analyst with the firm Cameron Hanover. "That would affect supply close to the affected area, as opposed to anywhere else."