Say Goodbye To Lowering Gas Prices

The past few months we have seen the price of oil futures fall at a rapid rate, yet gas prices have been slow to follow (but when oil futures go up, gas prices rise rapidly). This is one of the most frustrating aspects of oil markets. University of California Energy Institute director Severin Borenstein calls this the "rockets and feathers effect," describing how prices rocket upward but gently decline like feathers.

The recent decline in gas prices could be completely reversed as Hurricane Gustav sets its sites on the Gulf of Mexico. In overnight trading, crude futures shrugged off the strengthening dollar (which was helping to reduce oil prices) and began to rise. If Gustav continues along a path toward the Gulf, it could mean an uptick in gas station prices ahead of Labor Day weekend.

Accuweather.com, said that if Gustav passes through the Yucatan Channel into the Gulf, the storm could intensify into a Category 4 or 5 hurricane. A Category 5 hurricane is defined as having sustained winds over 155 miles per hour; hurricanes Rita and Katrina were Category 5 hurricanes, and shuttered most of the Gulf region's crude oil and natural gas production in the late summer and early fall of 2005.

At best, Gustav will cause platforms to be evacuated, at worst, say hello to $4+ gallon gas (again).

Gas prices: No relief in sight – Fortune
Oil prices rise as Hurricane Gustav nears Gulf – The Huffington Post
Photo credit: Luiz Baltar