Saturday, October 8, 2016
Hurricane Matthew may hit gasoline prices in ways you wouldn't guess
Hurricane Matthew is affecting not only the supply but the demand of gas as well. Many gas stations in Southeastern Florida are turning customers away because they are out of fuel. The average price per gallon is up 4.3 cents from last week and it rose another 2 cents in the past three days. This price increase is partly due to consumers filling up before the storm affects their area and to regional distributors stocking up. As drivers stay off the roads in the coming days and weeks, the demand for gas is likely to decrease which should help offset the higher price.
The damage of Hurricane Matthew is only expected to hit eastern Florida and coastal parts of Georgia and South Carolina. However, they are "already seeing gasoline cargoes being redirected for the East Coast - both to avoid the storm, and to fill the supply loss after." It will be interesting to see the total effects on the supply and demand of gasoline after the end of Hurricane Matthew.
http://www.cnbc.com/2016/10/05/gas-prices-hurricane-matthew-could-impact-gasoline.html
Subscribe to:
Post Comments (Atom)
Do you think there will be long term effects of the hurricane impacting gas prices for more than just the flux in the next month? Do you think property damage could impact the cost of oil in the future, either making it more expensive or cheaper to make the repairs necessary for regrowth?
ReplyDeleteSupply and demand for oil could return to its original equilibrium. However, this will take time and could possibly change the structure of the market, and consequently the equilibrium in the long run. For demand, consumers may be slow to begin spending on gas again if there is any damage to their property. The supply could take longer to recover to its equilibrium amount if any pipelines were damaged.
ReplyDeleteIn the short run, gas prices are high now in regards to hurricane Matthew, but in the long run it'll return to its original equilibrium. Natural disasters always have a an impact on supply in demand, some having positive effects and others negative. The only thing consumers can do in these times is to prepare to endure the change.
ReplyDeleteCurrently, as mentioned in the article, gasoline prices in Florida rose by 4.3 cents from last week, and 2 cents since Wednesday. This may restrict demand in the short run due to the increased gas prices. The hurricane is a negative supply shock, but as mentioned in the article, the storm will not affect oil infrastructures and refineries, so supply is highly unaffected. Only demand is affected, and consumers will eventually adapt to and face the increasing oil prices, which will move the long term gasoline demand and supply into equilibrium. Any natural disaster has a short term effect on demand and supply, but as firms/consumers adapt to the change, the long term economy of gasoline is again in equilibrium.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteYou make an interesting point that although the oil prices have rose in Florida before the storm, prices should go down soon. With everyone one evacuating the targeted areas, no one is going to keep this consumption rate as high. I wonder what the prices will look like for the rest of the East Coast areas affected, and there places in which people fled to as well.
ReplyDelete