Economist says gas stations may be price gouging

Economist says gas stations may be price gouging

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"If there are significant reductions in access to gasoline, there will be prices well above $4.00. They have to get high enough to bring supply and demand equal to each other," Dr. Bill Fox says. "If there are significant reductions in access to gasoline, there will be prices well above $4.00. They have to get high enough to bring supply and demand equal to each other," Dr. Bill Fox says.

By WHITNEY HOLMES
6 News Anchor/Reporter

KNOXVILLE (WATE) -- Fears of a gas shortage during Hurricane Ike may have turned rumor into reality. Many stations in the Knoxville area ran out of gas Friday and a local economist says that didn't have to happen.

"It reminds of a snowstorm in Knoxville where all the bread goes off the shelf," said University of Tennessee economist Dr. Bill Fox. "There may be no snowstorm, but the panic about it causes bread to flee from the shelves."

Dr. Fox says if people would have bought gas as they usually do, stations wouldn't be running out.

He says although the supply is limited right now, back-to-back refinery shutdowns don't guarantee a shortage.

"We certainly have gasoline in the U.S. that allows us to have some period of time without production taking place," Dr. Fox explains.

If the local area's pipeline supply runs out, companies can always truck gas in, preventing a shortage but not pain for people at the pump.

Gas prices spiked more than 30 cents overnight Thursday. By Friday afternoon, some stations raised their prices another 50cents to $4.49 a gallon.

Dr. Fox says this could be price gouging. "Whenever there is a run on supply, you see a few people try to gouge the situation and make a lot of money."

Dr. Fox says while some stations may say they're raising prices to curb demand, many are just taking advantage of the situation.

However, if Hurricane Ike damages refineries, supplies would be cut and prices hiked.

"If there are significant reductions in access to gasoline, there will be prices well above $4.00. They have to get high enough to bring supply and demand equal to each other," Dr. Fox says.

He notes if Ike hits the refineries, prices would remain high until the refineries get back online. If Ike bypasses them, prices could come down in a week or two.

To file a complaint about possible gas gouging in Tennessee, people can call (615)-741-4737 or click here.

The department turns complaints over to the state attorney general who determines whether to investigate or prosecute.

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