Gas prices increase on back of storms

Changes in gas prices typically spark discussions filled with four-letter words, such as OPEC and Iraq, but recent increases have brought a new word to the conversation - Ivan.

"A number of factors have contributed to the rise in gas prices," said Sarah Davis, spokeswoman for AAA Carolinas.

"For one, the hurricane did a doozy on oil production. Both oil- drilling flats and refineries were damaged or shut down, and this disrupted production."

The cost of a barrel of oil reached a record of $50 earlier this week.

"Last year at this time, oil prices were about $23, or half what they are now," said Juan Palomo, spokesman for the American Petroleum Institute.

"Recently they were down a little, and now they're on their way back up."

The Minerals Management Service reported Tuesday that in the Gulf of Mexico, 23 companies have evacuated 39 platforms and two rigs because of hurricanes.

These evacuations make up about 5 percent of manned platforms in the gulf and 2 percent of rigs.

The cumulative reports show that this shut-in production accounts for almost 2 percent of total annual oil and more than 1 percent of total annual gas.

But Davis added that other factors such as political unrest in Saudi Arabia and Nigeria and seasonal conditions have affected oil supply.

"The storms had an impact on oil supplies that were already low," Davis said.

"Also, most companies are at a time when they are switching and focusing on heating oil."

While companies are making efforts to revive production, the fluctuating cost of oil has affected gas prices directly.

According to the Energy Information Administration in the U.S. Department of Energy, the average price of regular gas has gone up 6 cents per gallon across the Southeast during the last week.

"My prices have gone up from $1.79 to $1.89 in a week," said Lateef Abdul, manager of the Hope Valley Exxon Service Center in Durham.

UNC students aren't exempt from the impact of rising gas costs, either.

"I think everyone with a car has been affected by the rise in gas prices," said Sean Kearney, a junior history major.

"I try not to drive as much as possible."

While people cope with the high prices, the future hinges on the resilience of the oil market to recoup and compensate for foreign turmoil.

"I couldn't venture a guess as to what prices will do," said Stanley Black, a UNC professor in the economics department.

"They're higher than usual, so I expect they'll go down, but I don't know when."

To help meet the demand for fuel, the federal energy department is allowing certain refineries to tap into 1.7 million barrels of oil from the Strategic Petroleum Reserve.

Regardless, Davis said, "It's going to take a while to get prices reigned in."

Contact the State & National Editor at stntdesk@unc.edu.