Gas Prices Climb

Katrina Takes Part of the Blame

The cost of gasoline reached its highest price ever in early September. Drivers in Wisconsin paid an average of $3.50 a gallon for regular gasoline.

The price fell below $3 a gallon later in the month. But prices have not dropped back to where they were earlier this year.

Prices started rising quickly in early August. But they soared shortly after August 28. A group that follows gas prices says prices averaged $2.68 a gallon on August 28. But they climbed to their highest levels less than a week later.

Oil companies raised prices by 40 to 50 cents a gallon in two days. Bob Bartlett is president of the Wisconsin Petroleum Marketers and Convenience Store Association. He said such increases have never been seen before.

Prices average $3.50 a gallon

Some gas stations in the Milwaukee area charged as much as $3.50 a gallon. Higher grades of gasoline sold for even higher prices.

Many reasons were given for the sudden price increase. Some experts blamed the damage caused by Hurricane Katrina. Some also said prices increased because demand was high. Many people had planned to take long trips by car during the Labor Day Weekend.

The holiday weekend always includes the first Monday of September and the two days before it. Labor Day is the last holiday of the summer.

Hurricane Katrina hit the southern states of Louisiana and Mississippi in late August. Much of the gasoline and natural gas used in the United States flows through the areas affected by the hurricane.

Major refineries and pipelines were shut down for weeks as a result of damage caused by the hurricane. Refineries make crude oil into gasoline. Pipelines carry natural gas to areas where it is used.

Two large pipelines carry natural gas from the area affected by the storm to major cities in the eastern part of the United States. Both of the pipelines were shut down for days.

The southern states of Louisiana and Mississippi are in what is called the Gulf Coast. The term refers to the Gulf of Mexico. The gulf is the body of ocean that is south of those states.

Between one fourth and one third of the oil used in the U.S. is refined in the Gulf Coast area. Most of the refineries in that area had to shut down because of the hurricane.

Gasoline prices began to drop after the Labor Day holiday. Experts say demand for gasoline dropped because some people decided not to take long trips. They also said refineries slowly started getting back to normal.

The federal government also took an action that helped lower prices a little. President George Bush ordered the federal government to release some oil that it keeps for emergencies.

Erin Roth is executive director of the Wisconsin Petroleum Council. Roth said all of those things were adding to pressure to reduce prices. Roth also said demand started dropping as people decided not to drive as much.

Source: Milwaukee Journal Sentinel articles by Larry Sandler, Meg Jones, Jesse Garza