Why did gas prices jump in response to Hurricane Ike?
Demand side:
Gas prices across the Southeast and Midwest soared over the weekend, and while many would blame Hurricane Ike, human nature may be a more likely scapegoat.
Experts say that when a perception exists that gas is limited -- warranted or not -- consumers flock to the pumps even if officials implore them to stay calm.
It's a combination of fear, desire, distrust and protectionism, experts say.
"When you have a perceived scarcity of any product, research shows the attractiveness of that product goes up," said Dr. Rao Unnava, marketing professor at Ohio State University.
Grocery and department stores are keenly aware of the phenomenon, Unnava said, which is why sale flyers often declare things like, "limit three items per customer" or "price valid only through Friday."
Cause: Increased demand due to perceived future supply shocks
Effect: Higher prices
Supply Side:
With gasoline, scarcity is a false perception, Unnava said. There is ample gas in the United States, even after Ike delivered 110-mph winds to Galveston and Houston, an area that's home to a significant portion of the nation's oil refineries.
Gov. Rick Perry announced Monday that Texas' oil and gas industry "dodged a bullet" and that "some of those refineries are actually back in operation as we speak."
This isn't to say human nature alone drove the spike in gas prices; the oil market's supply side certainly played its part.
Refineries, pipeline and oil platforms are still being assessed after Ike, but the damage apparently isn't as severe as predicted, said Gregg Laskoski, spokesman for the southern region of the American Automobile Association.
Cause: Temporary supply interruption
Effect: Higher prices
