Due to the recent hurricane activity and severe damage along the Gulf of Mexico, gas prices in New Jersey have risen more than $0.10 cents per gallon, which has left some state residents concerned about the correlation.
The increase in gas prices have been attributed to Hurricane Harvey, which made landfall in eastern Texas on Aug. 25.
Patrick DeHaan, a senior petroleum analyst at GasBuddy, a firm that analyzes gas prices, spoke to Vox about the effects Harvey would have on the industry.
According to him, around 15 to 16 percent of all United States refining capacity was offline in the days before Hurricane Harvey.
Beyond Texas, however, the storm has affected the entire national economy, pushing gas prices to the highest they have been in two years, according to a Sept. 8 article from Business Insider.
In Long Branch, gas prices as of this week range from $2.69 to $2.79 per gallon, where just one month ago prices were averaged at $2.41 per gallon.
According to TIME Magazine, on Friday, Sept. 1, the national average for regular gas had increased $0.18 per gallon.
Within 24 hours of the storm, prices in Texas, Ohio, Georgia, and the Mid-Atlantic states had jumped by $0.10 a gallon.
Elizabeth Newcombe, a senior business management student, said, “My first reaction to the rise in price was annoyance because I have no alternative options. No matter how high the gas prices are I still need to buy gas and drive the same distance. I am trapped by our government and have no alternative for public transportation in town.”
Some students at Monmouth have noticed the price hike in their daily commutes.
Alyssa Cosentino, a senior psychology student, said, “Usually it takes about $25 to fill my tank, but recently that hasn’t happened and it is costing me so much more.”
A possible answer to the elevated prices could be an economic phenomenon known as ‘price gouging,’ which happens when a seller unfairly spikes prices of goods or services to a level much higher than what is considered fair.
Forbes Energy mentions this may be an issue in Texas where gas prices have been reported at $7 per gallon. Some stations are entirely out of gas, leading to shortages across the state.
However, in New Jersey the cost rise is more comparable to the issues with production, not unfair inflation. Dr. Stuart Rosenberg, Chair of the General Education Committee at Monmouth University and the President of the Northeast Business and Economics Association, said, “At the most basic level it comes down to supply and demand. If the energy companies supply goes down, which is the case currently, and the demand goes up, the prices will rise.”
According to the US Energy Administration, more than 45 percent of total U.S petroleum refining capacity is located along The Gulf Coast.
Gasoline, being a petroleum-derived liquid that is used for engine fuel, is thus negatively affected by these storms.
Justin Pritschel, a senior political science student with a minor in economics, said, “A lot of oil refineries on the Gulf of Mexico suffered production damage from Harvey, [and with] less supply… [the] price goes up.”
Most of these refineries themselves have not been physically damaged, but the flooding in surrounding areas have kept personnel from working in the refineries and that has negatively affected production rates, according to Pritschel.
According to PIRA Energy Group, a forecasting and analytics unit of energy data provider S&P Global Platts, gasoline prices typically return to normal two to four weeks after a crisis-induced peak.