In anticipation of Hurricane Rita hitting near Houston in a few days, the spot price for wholesale gasoline increased 10 cents per gallon yesterday and likely more today. Can the retail price be far behind? I expect that we'll see that 10 cents at the pumps very soon, and possibly even more in retail price increases. So fill up your tank ASAP.

I know that previously I said gasoline prices would come down after Labor Day due to reduced demand. But anticipation of a further reduction in supply due to the number of refineries in the Houston area has changed all of that. I expect prices to eventually come down, but not for a number of weeks -- or more.

 

While I appreciate the warning, does an extra $2.00 really matter that much? Even if you were to fill up every week and paid an extra $2, it's just barely $100/year. And if it's not going to come down for weeks, you will end up paying the inflated price regardless of if you fill up before the spike or after.

 

Guess I'm just cheap. $2 is still $2.

I also hate paying over $3 per gallon and when I filled up today it was below that. Psychological -- probably.

 

It amazes me that when there is less oil production that the prices go up quickly. On the other hand when the oil is cheaper it takes a while to trickle down. Gas seems to shoot up twice if not three times the rate of it dropping. I know that the cost has risen for a barrel but it always seems that oil companies really know how to get their way.

 

In this case we are talking about the spot market for gasoline. The traders in that market are very savvy and push prices up and down very quickly. The oil companies do not always follow the spot market's many movements. But with this big storm (Rita) heading for Houston, I expect to see prices rise quite quickly with the increases in the spot market.

During Hurricane Katrina, spot prices went up over $1 in one day and the oil companies generally increased pump prices by about 50 cents at the same time. From that first big jump, oil companies continued to slowly increase, but for most markets (Atlanta is an exception) never went up the full dollar from when this started.

I expect that prices this time will probably top the prices reached at the top of the Katrina price-run-up. I'm certain that 10 cents will only be the start. So fill up now.