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Supply, demand, speculation, fear and hoarding are all contributing to a rise in gas prices. And, of course, Hurricane Katrina. Regular gasoline in Winona topped $3 at one station for the first time Thursday.
But most prices dropped to $2.79 late Friday. Other parts of the state saw prices shoot much higher, faster. A gallon of gas was $3.36 in Gilbert on Thursday and $3.49 in International Falls on Friday.
Rebecca Hostrawser, a Winona State University student, who commutes from La Crosse, wonders how she will cope if prices keep climbing.
"Everything is cut and dried — the job I do, the bills I pay. I don't have any play money. I would have to take another job, is what's going to happen," she said.
Thirteen Kwik Trip stores in Minnesota, Wisconsin and Iowa temporarily ran out of gas this week, a Kwik Trip official said Thursday.
Industry officials insist there is plenty of oil available but, following the storm's devastation earlier this week, there is increasingly less fuel at gas stations.
The bottleneck is at the refinery level. There is crude oil available but 10 refineries accounting for 12 percent of the U.S. refining capacity were taken off-line by the storm, said Gary Gonczy, Kwik Trip director of marketing and advertising.
In this part of the country, there has been an ample supply, but gas shortages have been caused by the public reaction to the news, Gonczy said.
People are buying more gas than normal, filling up all their cars, fearing shortages and rising prices, he said. That causes a disruption in the system. There are only so many trucks available to replenish the stations, he said.
Larry Svir of Severson Oil in Winona agrees.
"The thing that makes me nervous is an overreaction on the part of the public, purchasing more than they can use — hoarding," he said.
Svir says Severson has "livable" supplies of gas and the recent volatility in the market has been caused by the refinery problem and oil speculators. In the wake of the storm, no one has been able to ascertain the extent of the problem with the infrastructure because of limitations on fly-overs. Two major oil platforms in the Gulf will be inoperable for quite some time, he said, and there is a transportation problem due to major haulers being overbooked, causing delays in shipment.
He wouldn't be surprised if prices temporarily rise to $3.30 to $3.60 per gallon in the next two weeks, Svir said.
Mike Thill of Bay State Milling Company said businesses like his that don't run their own vehicle fleets are working with "pretty well fixed" production costs. Companies facing fuel impacts, as necessary, charge a fuel surcharge.
The only way it would have a major impact on his company would be if there was a fuel shortage and truckers parked their trucks, he said.
"Gas prices — it's a killer," said Eric Lawrence of Lawrence Transportation, a firm that operates over 500 trucks out of Winona. "I'm getting a little nervous about supplies."
Companies such as his can use fuel surcharges to pass on the increases, he said, but they eventually get passed on to the consumer.
Farmers don't have the luxury of passing on costs. They are dependent on commodities markets and speculators can disrupt those just as they can oil markets.
President of the Minnesota Farm Bureau, Al Christopherson, a farmer of 1,800 acres himself, says agriculture is a very energy intensive industry and in times like these, has to rely on the safety net of federal programs.
Farmers get hit directly by fuel prices during planting, cultivation and harvest, he said. They also face a delayed cost impact from petroleum-related inputs, such as fertilizer and herbicides, transportation to market and the shipping of commodities to their ultimate destinations.
Contact reporter David Krotz at dkrotz@winonadailynews.com or call (507) 453-3524.
