Gas prices rise as Gulf Coast evacuates
Gas prices continue to rise in Mississippi and other Gulf Coast states as Hurricane Gustav threatens oil supplies. Meanwhile, average price of gas creeps up nationwide.
NEW YORK (CNNMoney.com) -- Gas prices continue to rise in states along the Gulf of Mexico as workers on offshore oil rigs abandon ship and residents flee their homes ahead of Hurricane Gustav.
Meanwhile, the national average price of gasoline rose for a third day straight. A gallon of regular unleaded gas rose by about half a cent to $3.687 a gallon overnight, according to the motorist group AAA.
The price increase was most dramatic in Louisiana, where prices rose a bit more than 2 cents a gallon. Texas saw prices rise almost 2 cents. Mississippi's price increase was close behind, rising 1.6 cents a gallon. Gas rose by 1.4 cents a gallon in the coastal cities of Biloxi, Gulfport and Pascagoula, said AAA.
Alabama saw a daily increase of about 1.4 cents. Florida's prices rose by about half a penny, according to AAA. In New Orleans, gas prices rose by 1 cent a gallon. All of these areas are dependent upon oil rigs in the Gulf of Mexico as a major part of their oil supply.
By comparison, in states that are not directly dependent on Gulf oil like New York, Alaska and California gas prices declined overnight.
"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 crashed through the Caymans and Cuba as it headed for the Gulf of Mexico. It built into a category 3 hurricane and now threatens to smash into New Orleans and the surrounding region early next week.
If the storm continues along its projected course, 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."