Kassandra Bremont, comptroller for a chain of Maryland gasoline stations, fired up her computer in Catonsville and stared at the screen in disbelief as the latest gas prices came into focus. "Oh my God!" she yelled, rubbing her eyes. "In all my years, I've never seen the likes of this."
It was a sentiment shared across the nation late last week as gas prices spiked in the aftermath of Hurricane Katrina. Unhappy motorists lining up at the pump muttered darkly about "price gouging," words that also passed the lips of President Bush.
Is it gouging or is it volatility?
Without doubt, the pain is acute. Gas lines have materialized across the nation. Many stations have run out. Others raised prices defensively in a deliberate, but not entirely successful, effort to slow panic buying. Prices suddenly jumped 5 cents, 30 cents, 50 cents a gallon, and in a few places fell by just as much.
Many of last week's events were classic signs of an unstable market, economists said, one that has sustained an unexpected shock and is still plagued by shaky information. Buyers and sellers simply don't know what an acceptable price is right now for a gallon of gas.
Katrina slowed oil production, knocked out oil refineries and cut the nation's gasoline supply, but by how much, and for how long? Demand is suddenly jumping because people are panicking and topping off their tanks, but how long will that go on? As global traders respond to the huge U.S. price spikes, the spigots are opening on new sources of gas, but how long will the fuel take to get here?
"I think what's going on is that people don't know where the new equilibrium will be reached," said Lester Lave, an energy economist at Carnegie Mellon University in Pittsburgh. "So they are fishing around and struggling."
Prices approached $6 a gallon last week, briefly, outside Atlanta. That station owner was quickly hounded into submission, and Georgia Gov. Sonny Purdue (R) pledged to invoke price-gouging laws against any owner who goes overboard. Gov. Mark R. Warner (D) declared a state of emergency in Virginia so his government can do the same. Prices for regular gas approached $3 a gallon nearly everywhere and topped that price in many places, including dozens of stations in the Washington region.
Some motorists pumping gas late in the week said they suspected gouging, while others said station owners were probably just passing on cost increases from their wholesalers. But even the kindliest confessed to being mystified by this week's rapid price jumps.
"I don't know who is making money off of this any more," Dante Smith, 24, said as he pumped $3.19-a-gallon gas into his Elantra in Baltimore. "All I know is $15 just gets me a quarter tank. That's it."
Many states prone to hurricanes or earthquakes, including Virginia, have gouging laws that take effect after the governor declares a state of emergency because of natural disaster. These laws attempt to specify reasonable prices for essential goods -- for example, by limiting increases to 10 percent above the prices prevailing before disaster struck. But lawyers say enforcement of such statutes is rare and difficult even in disaster zones, they seldom apply elsewhere, and there's little precedent for applying them to the national market for gasoline.
Most people interviewed at gas pumps this week wanted to know what the station owner last paid for gas, figuring that amount, plus a reasonable markup, was a fair price for the station to be charging. But a half-dozen economists interviewed on the subject said that's not necessarily how things work.
