Gas prices down 20 cents from two weeks ago

>>> felt by a lot of drivers here in the northeast in the wake of hurricane sandy. many people spent the weekend waiting in long lines for the chance to fill up. when will they see some relief, and why has the price of gas actually dropped 21 cents over the past couple of weeks? john hofmeister is the former ceo of shell oil and founder of -- and founder and ceo of citizens for affordable energy. mr. hofmeister, good morning, good to see you.

>> good morning, thank you.

>> so down 21 cents over the last couple of weeks. why?

>> well, generally this time of year there's less driving overall, and so we have a seasonal decline in price which is normal, but in addition the economy is really quite weak, and we're down about 10% demand year over year which has affected the crude price, and because the prospects of growth as the business community and the society in general don't reflect much new demand coming, the crude price is down so the gas price is down.

>> i think a lot of people look and think, wait a second, after hurricane katrina the price of gas went up, but that's because that storm struck in a different region of the country.

>> well, yes indeed. 25% of the nation's refining capacity is on the gulf coast . katrina was a category 5 storm which meant refineries near the coast took a lot more wind, a lot more water, although sandy was properly named a super storm , it didn't have the sustained wind that we see on the gulf coast with a category 5 , and so you didn't have anywhere near the damage to the production facilities. but what makes the new york area, new jersey, new york, connecticut so complicated, matt in, terms of the supply system is you don't have that many refineri refineries. therefore you rely on pipelines and ports, and the ports took quite a bit of damage. you couldn't get barges and ships in there right away.

>> right.

>> the refineries weren't too badly damaged, but the pipeline was also shut down for a while because it exits on the water.

>> let me ask you this then as someone who knows the industry and the delivery system very well. how long do you think this situation is going to last, john? how long are people going to be waiting in the kind of lines or going in the odd-even rationing system, for example, that they are seeing in new jersey today?

>> well, odd-even was a good decision because it reduces demand by mandate, and what the region faced was unfettered demand which led to chaos, and i think we're into probably once the electricity is all connected, stations and depots can operate normally. it will take around five days or so to get everybody's tanks to normal. what really drives the behavior to go line up to fill up is fear, fear of the unknown , fear of when you need gas you won't have it.

>> right.

>> and people trying to protect their family, trying to get to work, and so they put excess demand on a system that is undersupplied, and that's what leads to the lines and to the rationing, but i think once we get to the electricity back, the problem will go away really quickly.

>> real, real quickly. was there anything that stayed in federal government could have done in advance of this storm, as it was coming up the coast to have alleviated some of these problems.

>> no. because nobody knows how much electricity will be lost. the companies pre-position tanks, but if the tanks can't go to stations that have electricity to offload, it doesn't make any difference. i think government did a good job. i think the industry is doing a good job. it's just a very, very hard time , matt.

>> john hofmeister, john, thanks so much for your input. i appreciate it.

>> thank you.