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Published Thursday, August 28, 2008 in Local

Photo by Jeffrey Leo

Jason Weidert, a Newnan High School teacher, fills his gas tank at the BP at the Moreland exit of I-85 Thursday.

Gas low Thursday at $3.41 in Newnan

By Sarah Fay Campbell

The Times-Herald

Predictions that gas prices would rise as the Labor Day holiday approaches didn't come true in Newnan, at least not by Thursday afternoon.

But Hurricane Gustav, currently making its way into the Gulf of Mexico, will certainly affect prices.

The only variable is -- how much?

It all depends on the path and severity of the hurricane.

On Thursday, forecasts had the storm hitting somewhere between the Florida panhandle and the Texas cost.

"It's so far away right now, we can't get too specific," said Matt Sena, a meteorologist with the National Weather Service in Peachtree City.

The projected path gets more specific the closer a storm gets to land.

But, a hurricane is "a type of system that... the computer models generally have a hard time handling," Sena said.

In New Orleans, officials are making sure to avoid the mistakes made when Hurricane Katrina struck. Some residents are already on their way out, though no mandatory evacuation will be ordered until the storm's path becomes more certain.

News of the storm caused oil prices to jump slightly higher on Thursday. But by the time the markets closed, oil was down $2.56, to $115.59 on the New York Mercantile Exchange.

The real effects of Gustav on oil prices will probably be seen Tuesday, said Greg Laskoski of AAA Auto Club South, which tracks gas prices.

Oil markets will be closed Saturday through Monday.

Overnight changes in the storm, though, could cause an oil rally today.

In Newnan on Thursday, gas prices varied some 14 cents a gallon, depending on location.

The cheapest gas in a brief survey was at the Citgo on Bullsboro Drive. Citgo was offering regular unleaded for a mere $3.41. Many other gas stations in the area east of the interstate -- which typically have some of the highest prices in Coweta -- were offering regular unleaded for prices ranging from $3.42 to $3.49.

Just a few miles south, however, things were much different.

The gas stations along U.S. 29 at Interstate 85 were in the $3.55 range.

"Usually, we kind of expect retail prices to go up in advance of a major travel holiday," Laskoski said. "That doesn't mean it always happens."

Last year, prices did not go up for Labor Day, he said.

"What may keep it from happening this year -- is a lot of people may stay put, especially if they are nervous hearing the news and worrying about Gustav," Laskoski said.

The Gulf of Mexico is the worst place for a hurricane to strike when it comes to oil and gas prices because a whopping 40 percent of U.S. refinery capacity is based in the gulf areas, Laskoski said. Additionally, approximately 25 percent of domestic oil production comes from oil rigs in the gulf.

"The biggest impact on crude oil prices is going to be the path that Gustav takes," Laskoski said.

If forecasters come to an agreement on the projected path before oil markets close today, "we could see that start to happen," Laskoski said. "But I don't think we're going to see it until Tuesday."

Of course by Tuesday, the path of the storm will be clear, and landfall will be imminent, if it hasn't already occurred. There's also the growing threat of Tropical Storm Hanna, brewing in the Atlantic.

Even if Gustav doesn't do any damage, there will be some oil price spikes, because all offshore oil platforms are routinely evacuated when a major storm threatens.

But that increase would be short lived.

"If we're blessed to the point where Gustav and Hanna don't do any damage, we would be in a good position to see gas prices to continue to come down," Laskoski said.

On the other hand, a storm as catastrophic as Katrina could lead to a 30 percent increase in gas prices, said Tom Klozas of the Oil Price Information Service. That would put prices in the $4.50 per gallon range.

Typically, said Laskoski, each $10 increase in the price of crude oil means a 25 cent increase in the price at the pump.