Consumer fear fuels gas spikes

Drivers in Bloomington got a shock after the Sept. 11 terrorist attacks on New York and Washington.\nAs traffic inched by gas stations the Tuesday and Wednesday after the attack, cars blocked the entrances, jockeying to get in line to buy fuel.\nGas prices soared into the $3 and $4 range as consumer fears about fuel prices became justified. \nBut, the price spikes were unique to Bloomington, South Bend, Lafayette and Indianapolis. Gas prices in the rest of the state remained stable.\nStudents felt the pinch of the high gas prices on their wallets. Many students, already strapped for cash, were unable to pay to fill up their tanks.\n"It would have cost me 60 or 70 dollars to fill up my car," said sophomore Chris Murphy. "I can't afford that. I had to wait to fill up, and I needed to go home (that) weekend."\nProfessor of Economics Arlington Williams said the price spikes were not unusual or unexpected.\n"The sudden demand drove up the price of gasoline, and people kept buying in fear of even higher prices," he said. "This buying behavior caused an upward spiral in prices."\nSuch behavior of gas prices is typical. The sudden demand caused station owners to raise their prices in case their next shipment was more expensive or did not arrive at all. In a press release, the Indiana Petroleum Marketers and Convenience Store Association said some major suppliers raised their wholesale prices and rationed fuel to stations, causing shortages or outages of some grades of fuel.\nThe disablement of an Illinois refinery Aug. 14 added to short supplies in the Midwest. The refinery was closed because of a fire. \nBritish Petroleum did not raise their wholesale prices, and said there are adequate stocks of fuel for the United States market. The buying pattern of gasoline has returned to normal, and any high prices should subside. BP has also brought extra trucks into the Midwest to help resupply stations short on fuel.\nThe high prices of gasoline subsided after the incident two weeks ago, but higher gas prices may be in the future. With President George W. Bush's vows on Thursday to stamp out terrorism, the price of petroleum might go up significantly. \nDRI-WEFA Energy Services, an energy consulting firm said major oil-exporting nations, especially Iraq, might take a war on terrorism as a war on Islam, causing cutbacks into exports to the United States. The oil dependent economy of the United States could not sustain itself with its own production, and any cutbacks in imports would cause crude oil prices to rise significantly. \nBut DRI-WEFA said "no major oil price spikes are likely without further political developments" in a recent report.\nPolitically motivated cutbacks are unlikely, because the Bush administration will be careful to avoid conflict with the member nations of Oil Producing and Exporting Countries and will clear all military actions that might affect them, said Jeffrey Hart, political science professor and chair. \n"Secretary of State [Colin] Powell has been doing a good job getting support from the Arab countries in the region," Hart said.\nThe only member of OPEC that is unpredictable in suppling the United States is Iraq, whose government views the administration as hostile and unpredictable.\n"Cutback of supplies from the members of OPEC are possible, but unlikely," said Bruce Jaffee, associate dean of academics of the Kelley School of Business. "Those nations still depend on the revenue developed from oil exports. Our money is still green"