Lexington, Ky. (WKYT) - Hurricane Isaac probably won't make landfall along the Louisiana coast until late Tuesday night, but we're already seeing the impact here in Lexington. Gas prices spiked Tuesday afternoon to nearly four dollars a gallon at many stations.
As Isaac grows in intensity, anticipation of the storm affects us all, and economists are trying to anticipate the various outcomes.
Economists say if Hurricane Isaac were to hit oil rigs in the Gulf of Mexico, the impact could be felt a lot further than the storm is expected to travel. That's why rigs are typically shut down, creating an interruption in supply. "If that becomes likely, oil companies and gas companies anticipate that interuption in supply," University of Kentucky Professor of Economics, Dr. Ken Troske said, "and therefore they will raise gasoline prices ahead of it in order to try to smooth out demand."
Troske says it's not just the storm that gas sellers are trying to forecast. Just as important is the anticipation of how customers at the pump will react as they learn more about which way the wind will blow. "If you don't do this, then they'd all rush out to the gas station and start filling up all their cars and tanks and buckets and anything they can fill up in anticipation that gas would go up," Troske said.
The good news for customers is, if the storm passes without major incident, Troske believes the recent surge in prices will fall back to pre-Isaac levels, if not... "If there's a direct hit on some of these oil platforms and it significantly damages them, then I think the price could go up substantially," Troske said, "maybe to four and a quarter, 4.50."
Troske says different gas sellers may react differently to the risk of storm damage, so his advice to consumers: shop around.