Junior Loren Metz would not have planned to drive home this weekend if her father had not filled her gas tank after she moved into Schmidt residence hall.
The hour-and-15-minute drive to Kokomo makes a small dent in her 1993 Capri Classic Station Wagon’s large gas tank, but like other drivers hitting the road over Labor Day weekend, she has taken the rising gas prices resulting from Hurricane Katrina into consideration.
“It’s only going to take me a little over a quarter of a gallon to drive home and back,” Metz said.
Gasoline prices generally spike to some degree around any holiday, Greg Seiter, public affairs manager for the AAA Hoosier Motor Club, said.
“Usually you’re just talking about a few cents here and a few cents there,” Seiter said. The effects of the hurricane on petroleum supplies combined with the high prices of crude oil, he said, could make price fluctuations relatively difficult to notice this year.
“Labor Day is not really even much of a contributing factor at this point,” Seiter said.
Gwen Robertson, manager at Muncie’s Meijer Gas Station, is hesitant to predict Labor Day price fluctuations.
“I look for it to go up over Labor Day [weekend], but you never know,” Robertson said, noting that President Bush’s decision to release reserve oil supplies could stabilize prices. “Your gas market is constantly up and down.”
THE EFFECTS OF KATRINA
In weeks previous to Hurricane Katrina, crude oil prices averaged from $66 to $68 per barrel. A record high of nearly $71 per barrel was reached Tuesday as the hurricane caused offshore platforms and onshore refineries in the Gulf of Mexico, which provide about 7 percent of the United States’ demanded oil supply, to temporarily shut down. The delay in output affects gasoline prices regardless of the amount of damage to equipment in the Gulf.
“Any disruption in that process is going to have a negative effect on the marketplace,” Seiter said.
Customers waited in long lines at service stations throughout Muncie on Monday evening after hearing rumors of price hikes resulting from Hurricane Katrina. Robertson said fuel trucks did not deliver available gas supplies when the Meijer station ran out of unleaded gas.
“The company that delivers our gas was sitting, waiting at the fueling station, and the fueling station wouldn’t release any gas,” she said. The corporate office offered no explanation for withholding its supplies, however. Forecasting whether or not her station will run out of petroleum over the holiday weekend is nearly impossible, Robertson said.
“I just make sure we have extra people staffed on Friday night because a lot of Ball State students will stop here on their way out of town,” she said.
HOW PRICES WORK
Two years ago, a barrel of crude oil cost about $30. Several factors lie behind petroleum’s twofold increase in price since 2003, Seiter said, including tension in the Middle East, threats of ongoing terrorism and political disruptions in the Organization of Petroleum Exporting Countries.
“The United States imports a very significant amount of its petroleum, and in many ways we are at the mercy of some of the OPEC nations,” Seiter said.
Though the futures oil traded on stock exchanges today will not be used for about another month, he said, spikes in crude oil prices have recently resulted in immediate jumps in gasoline prices at service stations.
“There is a lot of speculation involved in this entire process,” Seiter said. “There doesn’t have to be a terrorist attack for there to be fear in the marketplace, and fear in the marketplace then equates to the changing in purchasing trends by those who are buying oil.”
The worries and lack of understanding are not limited to consumers.
“Those fears are also passed along to those in the gasoline industry,” Seiter said.
He warns consumers to take predictions of changes in the gas market with a grain of salt.
“You will hear some people make predictions as to what prices are going to do,” he said. “Quite honestly, anyone that does that is sticking their neck out because no one has the ability to predict.”
CONSUMER REACTION
Customers at the Meijer gas station are more likely to now fill their tanks to a certain dollar amount and stretch that gas as far as possible, Robertson said. She said one woman puts $20 of gas into her car each week and stays home if she runs out.
“There’s a lot of frustrated people out there,” Robertson said.
Junior Amanda Hodgkiss drove to Tennessee Friday and returned Sunday when prices were considerably lower than late this week. Intending to drive to Dayton Wednesday night, she hoped to find relief from the price increases motorists saw throughout the day.
“I think it’s outrageous. I paid $2.41 a gallon in Tennessee, and now it’s almost $3.20 here. That’s a huge jump in the past three days,” she said. “I’m going to put $20 in it here and see what the gas prices are in Dayton. If it’s cheaper there, I might fill up there before coming back here in the morning.”
Freshman Erica Santiago said she has made efforts to cut costs as well. She intends to drive two and a half hours to her hometown of Walkerton, Ind., this weekend.
“I do more carpooling,” she said. “I don’t drive as much as I used to.”
Sue Weller, Ball State director of facilities, business services and transportation, said university fuel costs have increased by about 25 percent over the past two years. She has noticed a considerable drop in usage of university vehicles.
“Travel’s definitely been down. We’ve noticed a decreased number of trips, although we’ve had an increase in the number of bus trips,” Weller said. “It looks like people are trying to get more people to travel together.”
To cut spending, the university has applied for a grant to assist in biodiesel fuel costs, explored the benefits of using E85 fuel that contains 85 percent ethanol and 15 percent petroleum and purchased a hybrid shuttle bus and hybrid electric cars. Petroleum prices, however, would have to reach nearly $5 a gallon for Ball State to benefit from the electric cars, Weller said.
Because the university does not pay federal tax on fuel, wholesale prices are lower for Ball State than for the average consumer. Even so, the transportation department was caught off guard by the hurricane and resulting price increases.
“What’s happened in the last 24 hours has kind of surprised all of us,” Weller said Wednesday.
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