Gas prices in Charlottesville and around the country shot up dramatically yesterday due to Hurricane Katrina's impact. At the Barracks Road Shell station prices opened at $2.65 Wednesday and settled at $2.95 Thursday for a gallon of regular gasoline.
The devastation of Hurricane Katrina on the Gulf Coast took out 24 percent of American crude oil production and 11 percent of already strained refining capacity, according to Cambridge Energy Research Associates.
While CERA predicted that President Bush's decision to tap the Strategic Petroleum Reserve would temporarily dampen the impact of the shock, the long-term impact on the oil market will depend on how quickly refinery capacity comes back online.
"The best way to think about the impact is as a tax on users from producers," University Economics Prof. Edwin Burton said.
Many members of the University community already are feeling the sting of higher gas prices, and some said they are making lifestyle changes to compensate.
Third-year College student Bryan Smith said he must make a 15-mile roundtrip commute in his family's GMC Yukon everyday to get to Grounds and already changed his daily routine.
"I don't like to go home for lunch anymore," Smith said. "If I have to double the amount of driving, that's too much money."
Other students said they are cutting down on trips home or to visit friends.
"I'll be paying much more to visit my loved ones every few weeks," third-year College student Alexander Covington said. "It will become cheaper to take the unreliable train."
Local taxi drivers said they are finding it particularly tough to earn a living with the price increases.
"It's the worst and hardest I've ever seen," said Ray Taylor, a 23-year veteran of Yellow Cab. "The worst is yet to come. Sometimes I find myself working three or four days a week for nothing."
Taylor said it now costs him in excess of $50 to fill the tank of his Ford Crown Victoria. He said he watched with great interest a television special about drivers who were making their own diesel gasoline with methane and grease from fast-food restaurants.
"It takes two hours and costs 75 cents a gallon, and you can fill a 100-gallon tank," Taylor said.
The prospect of such consumer adaptation scares oil producers, who have the biggest incentive to bring prices back down, Burton says.
"It actually scares the oil producers because there's major substitution that goes on," he said.
Once consumers invest in more energy-efficient cars and appliances, they will not return to the same level of energy consumption, regardless of the price of oil, Burton says. It took 20 years after the last oil shock in October 1979 for energy consumption to reach the same levels as before the shock.
"If prices go up long term, ironically, it will be a plus," Burton said. "You'd develop alternative sources of energy, and consumption would decline."
Smith is representative of Burton's assessment. He said when he buys his own car, he'd like to downsize from an SUV to an energy-efficient hybrid.
Read More
In a changed Honor system, the Honor Committee struggles to generate engagement
By Bertie Azqueta | 17 hours agoThe Honor Committee’s public meetings have been substantially shorter this semester. This semester the Committee’s meetings have had an average length of 34 minutes compared to 50 minutes in the 2024-25 term and 47 minutes in the 2023-24 term.
Student hot-spots on the Corner raise prices in response to increased operating costs
By Lily Kostro | 17 hours agoAndy McClure, owner of The Virginian and a class of 2001 alumnus, said that the last five years have placed a strain on the restaurant business due to significant expense increases.
How does U.Va.’s agreement with the Justice Department compare to the Compact?
By Nicolas Biernacki | YesterdayWhile both the rejected Compact and the Justice Department agreement faced resistance from the University community and have several similarities, the agreement provides firmer protection for academic freedom.
