Gas prices peaked at record highs just about one week ago before dropping down — and now they may ride another hurricane surge back up. Iowa Department of Natural Resources energy analyst Jennifer Moehlmann says Hurricane Rita could stop the Iowa gas price fall. Moehlmann says Rita is targeting the Texas area that has a lot of oil and gas production, and that’s making traders “pretty worried.” Moehlmann says the severity of the hurricane will give us a good gauge on the direction of gas prices. She says if Rita strikes a glancing blow and there’s not significant flooding or damage, then prices should come down relatively quickly. Grain prices are often impacted when there’s rain in Iowa — and Moehlmann says the hurricanes have the same impact on the commodity trade of gas. She says it’s sort of the same thing that happens with corn and soybeans and the market mentality. She says it follows the old adage that marketers, “buy the rumor and sell the fact.” Moehlmann also likens it to the discovery of a case of Mad Cow disease in the U-S that caused cattle prices to drop for a time, even though it was only one case, as people weren’t sure what the impact would be. Gas prices reached three dollars and above but in the latest survey were at two dollars and 76-cents a gallon for regular – a D-N-R survey record. One product that’s benefiting from the high gas prices is gas that’s blended with corn-based ethanol. Moehlmann says ethanol sales are way up because it tends to be a couple cents cheaper. She says ethanol-blended gas made up about 66-percent of all gas purchased in all of 2004. But she says through July of this year ethanol-blended gas accounts for 75-percent of sales. Moehlman says the extra exposure may help keep ethanol popular even if gas prices drop back down. She says there probably will be brand loyalty. She says people may’ve been afraid to try ethanol before, but now have used it and will stay with it unless there ends up being a big price difference. Diesel prices also set a new D-N-R survey record on September 15 at two dollars and 72-cents a gallon.
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