Archive for Sunday, September 14, 2008

Gas prices jump after hurricane hits

September 14, 2008


— Gas prices jumped Saturday as Hurricane Ike pounded the refinery rich regions of Texas and Louisiana, threatening to shut down the nation's vast energy complex in the Gulf of Mexico for days.

Gas prices nationwide rose nearly 6 cents a gallon to $3.733, according to auto club AAA, the Oil Price Information Service and Wright Express.

The cost for a gallon of gas could head back toward all-time highs of $4-per-gallon, reached over the summer when oil prices neared $150 a barrel.

Geoff Sundstrom, AAA's fuel price analyst in Orlando, Fla., said Ike has disrupted supply at the wholesale level in the Gulf Coast, where prices struck $4.85 a gallon Friday.

Refineries may remain shut-in for days, even if there was no serious wind damage or flooding.

"The reality is, we're facing a temporary shortage in wholesale gasoline," he said.

Ike ravaged southeast Texas early Saturday, battering the coast with driving rain and high wind. Thousands of homes and government buildings are flooded, roads are washed out, and power outages were approaching 2 million customers from Houston into Louisiana.

Ike was about twice the size of Hurricane Gustav, which rammed into the Louisiana shore two weeks ago.

The storm surge was less severe than what had been predicted. Wilson Shaffer, chief of the National Weather Service's evaluation division, said Saturday morning that the highest surge so far was seen at Sabine Pass in Texas, at about 13.5 feet, according to tidal gauges.

Forecasters had predicted a surge of up to 25 feet, which would have been the highest in recorded history in Texas, above 1961's Hurricane Carla, a storm that brought a 22-foot wall of water, with some 15 feet rushing inland up shipping channels.

The Sabine Pipe Line, a crucial natural gas conduit, has been shut down, according to the CME Group, parent of the New York Mercantile Exchange.

The CME made a finding of force Majeure for all remaining delivery obligations for September natural gas contracts.

Refineries along the upper Texas Gulf Coast account for about one-fifth of the nation's refining capacity. Exxon Mobil's refinery in Baytown, outside Houston, is the nation's largest.


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