Tropical Storm Isaac drives gas prices up

A $100 sale is seen on a gas pump on Friday, April 20, 2012, in Barre, Vt. Pump prices rose relentlessly from January through April, pushing average gas prices above $3.90 a gallon and taxing familiesâ?? budgets. Some forecasters expected a $5 peak by the time families got on the road for summer vacations. But prices are expected drop by 10 cents by next week, thanks to a recent drop in oil and wholesale gas prices and frugality at the pump.
AP Photo/Toby Talbot

(CBS News) Tropical Storm Isaac is causing pain far away from Florida and the Gulf Coast today -- at the gas pump to be exact. The storm is expected to bump up gas prices by another five to 10 cents over the next week.

Tuesday morning on "CBS This Morning," CBS News business and economics correspondent, Rebecca Jarvis, explained that oil refinery closures in the Gulf have decreased output and will send gas prices up across the country.

More than 40 percent of U.S. refineries are along the Gulf Coast and about half of them are directly in Isaac's path, Jarvis reported.

Analysts say they don't expect Isaac to be as devastating as Hurricane Katrina and that closed refineries are set to re-open within two weeks. The situation is aggravated by the current state of gasoline supply, which is 4 percent lower than usual this year, due to six refinery closures in early August. As a result, some analysts estimate consumers could soon be facing $4-a-gallon prices at the pump.

Still, the peak in prices is likely to be short-lived the end of summer vacation season is near and prices tend to fall after the summer driving season. Refinieries also typically change their gas formulas following Labor Day, and the winter mix is cheaper to make than the summer mix.