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Phil is one of the world's leading energy market analysts, providing individual investors, professional traders and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline and energy markets. Phil's market commentary, fundamental and technical analysis, and long-term forecasts are sought by industry executives, investors and media worldwide. Now you can get this highly sought after analysis with your daily research newsletter from Phil Flynn. Learn more about this complimentary offer and sign-up today.

Wholesale gas prices make a historic surge as Gulf Coast refineries shutdown and Texas residents look to get out of Dodge. Or maybe because Dodge is in Kansas City they should try to get to Dodge as they try to dodge Hurricane Ike.

The latest forecasts show IKE barreling deep down on the heart of Texas. This is the heart of the US oil industry where we get and refine our barrels. Yesterday when it was reported that some major US refineries were shutting down, panic buying set in the cash market and we saw the biggest surge in Gulf Coast wholesale prices since the 1970's. Ahead of Ike's surge wholesale gasoline prices in the U.S. Gulf went over $5 a gallon. As eleven Texas refineries representing 16 percent of total U.S. refinery capacity shut down, it was enough for cash buyers to scramble to try to secure as much supply as they could ahead of the storm. Some buyers may be squeezed out and it may mean that around the path of the storm we will more than likely see spot shortages. Some stations will run out of gas and we will see gas lines at others.

Yet as the cash market went crazy the futures barely noticed. Oh sure we saw a spike in RBOB and in the heating oil but based on what the cash was doing it was almost like we were trading a different commodity. Yet going into this storm obviously we cannot count on that to continue. Taking a position short or long into this storm is a dangerous proposition. The market could spike if it senses that damage could be severe but at the same time if the storm does not cause any real damage we could see the market plummet. Remember the lessons of Gustav. I can't tell you how many people that were stunned that oil fell as Gustav hit despite the fact that I tried to warn them. I said this storm may do more damage to demand then to supply. Remember this storm is raising prices as the demand side of the equation is already deteriorating.

That is not to say that this storm might be different. In fact, this storm will be different as it seems each one of these storms takes on their own personality. This seems especially true when it comes to destruction of energy. As anyone reading in between the lines of The Energy Report or has called knows, we have been selling rallies and putting bearish option strategies. If you have done this and feel like you want to ride out the storm it might be a good idea to buy some October call options to help reduce the risk of riding out the storm. My gut feeling on this storm is that a sharp rally would provide a good selling opportunity but this is an extremely high-risk trade. Just because it was a great sell on Gustav and Katrina does not mean selling Ike's spike will be too. But sometimes the best trades are counter-intuitive but also can be the most risky.

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Obviously we also have technical considerations as well as $100 a barrel is that psychologically important area for the bulls to defend. Any close below $100 a barrel will be a defeat for the bulls as many hold out hope that $100 a barrel will be the new floor and if that floor is broken so too will be the heart of the bull.

Say a prayer for our friends along the coast and all of those affected by this storm and let's hope that it is not as bad as feared.

Phil Flynn is Vice President, Energy and General Market Analyst with Alaron Futures and Options and is one of the world's leading energy market analysts. Phil heads the Alaron Energies Futures Brokerage Division offering brokerage services to individual investors, professional traders and institutions. Phil provides up-to-the-minute investment and risk management insight into global petroleum, gasoline and energy markets. Phil's market commentary, fundamental and technical analysis, and long-term forecasts are sought by industry executives, investors and media worldwide.

Phil and his energy team were one of the first to predict that global crude oil prices would exceed $30/barrel in the year 2000, a correctly predicted market milestone that has highlighted the economic scene in the new millennium. Phil also called the rise of retail gas prices in 2001. Most recently, Phil Flynn has again accurately predicted that global crude oil prices would reach close to $40/barrel ($39.99/barrel) in 2004. Through hundreds of media interviews, Phil Flynn and Alaron Futures and Options have become familiar names in living rooms and boardrooms worldwide. The world's print, broadcast, online media and small businesses have come to rely on Phil's accurate and animated forecasts, analysis, speculative and hedging opportunities.

Get daily research letters from Phil Flynn of Alaron Energies

Phil is one of the world's leading energy market analysts, providing individual investors, professional traders and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline and energy markets. Phil's market commentary, fundamental and technical analysis, and long-term forecasts are sought by industry executives, investors and media worldwide. Now you can get this highly sought after analysis with your daily research newsletter from Phil Flynn. Learn more about this complimentary offer and sign-up today.