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Sandy: Gas prices stable, but pumps run dry

NEED TO KNOW
  • Nationwide average for gallon of regular gas fell below $3.50 for first time since March
  • Average price in New York up less than 1 cent; New Jersey up 1.1 cents
Sandy has caused long lines at the gas station.

Superstorm Sandy has officially caused a gasoline shortage in the Northeast and it’s beginning to have a significant impact on residents and businesses in the area. Many of the gas stations in and around New York City are still out of commission due to the aftermath of the storm, and it appears as though things aren't likely to improve for at least another week or two.

When disaster strikes, Americans can usually count on at least one familiar problem to come our way: more pain at the pump! But in much of the Northeast, prices aren't up, because supply isn't the problem, it's the ability to distribute. The widespread loss of power, due to flooding and record storm surge in parts of New York and New Jersey has made it impossible to distribute gasoline.

Four days after Sandy began ripping through the Northeast, millions of homes and businesses are still without power, while gas stations are in complete disarray. With much of the New York subway system shut down because of power loss and massive flooding, many residents have been forced to rely on other methods of getting around outside of public transportation. But even if you have a car, getting gas may not be an option in many areas.

Many stations have full tanks of gasoline, but no power to pump it. And the gas stations that are fortunate enough to still have power are running out of supplies very quickly. Cars and individuals continue to line the streets, hoping to get at least a few gallons. In some areas, the hundreds of cars have waited for hours.

Read more: Will Sandy be among the most costly disasters?

Only about 40% of the 2,944 gas stations in New Jersey are currently operational and have power, Robert Sinclair, New York spokesman for AAA told CNNMoney. Things are even worse in New York, as only 35% of the gas stations tracked by AAA on Long Island are operational and only about 35% to 40% of those in New York City, according to Sinclair.

The shortage isn’t just causing transportation issues, but many residents in places like New York City need gas to power generators that provide heat in their home. In areas where very few stations are up and running, the picture isn’t pretty. Some lines in New Jersey are now miles-long, and local police have been called in to maintain order and keep customers organized.

But despite the chaos, gas prices haven’t jumped too much. Nationwide, prices continued to fall to an average of just below $3.50 for a gallon of regular – the first time since March. That’s typical for this time of year, since gas prices in the United States usually decline in the fall, as demand tends to drop after summer vacation season comes to an end.

But in extenuating circumstances such as a disaster, gas prices often spike for a variety of reasons. In situations where consumers are desperate for gasoline, gas stations have been known to get involved in price gouging – illegally boosting prices above a certain level, knowing consumers will pay the elevated price. But prices haven’t jumped much, even in the hard-hit areas.

Many are surprised that prices in the storm-affected areas haven’t experienced a huge spike. The statewide average for a gallon of regular gas in New Jersey rose 1.1 cents to just below $3.56, according to AAA, while New York's prices jumped by less than 1 cent statewide to nearly $3.94 per gallon. One explanation for the only slight uptick in prices is that much of the available gasoline in these areas could be coming from sources that haven’t been affected by the storm, according to Matt Smith, an analyst for Summit Energy Services.

AAA actually expects gas prices across the country to continue to fall through the end of the year, assuming production is quickly restored during Sandy recovery.

Most of the major gasoline chains supplying the Northeast have experienced some type of interruption in production or distribution. While damaged refineries caused a decrease in production, damaged ports made it difficult to get the gas that was available distributed to the areas that need it. Experts say refineries should have enough supply to meet the current demand, but when damaged ports and harbors are closed, along with roads leading to affected areas, the gasoline can’t get to where it needs to go, Charlie Drevna, head of the American Fuel and Petrochemicals Manufacturers Association, told Platts.

Experts say the gas shortage could continue through the end of next week, and possibly the week after that, depending on how quickly power is restored to the affected areas.

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