While there have been no skyrocketing prices yet, rumors are rampant
about fuel shortages and the possibility of per-gallon prices approaching the
$4 mark in the aftermath of Hurricane Katrina.
Katrina devastated parts of Louisiana, Mississippi and Alabama and shut
down about 90 percent of the oil production in the Gulf of Mexico. Katrina had
winds ranging from 175 mph while it was a Category 5 hurricane in the gulf.
Then dropped to 140 mph as it made landfall Monday morning as a Category 4 hurricane,
according to the National Weather Service.
The full extent of the damage to oil production in the Gulf is not yet
known, and oil companies say it could take several days to sort it all out.
In the meantime, crude oil surged back up past $70.85 a barrel again in
early trading on the New York Mercantile Exchange on Tuesday, Aug. 30, before
rolling back to around $69. It hit the $70 mark for the first time Monday, Aug.
Diesel prices hadn’t changed much from Monday. ProMiles reported the
national average at $2.634 per gallon, up slightly from $2.61 the day before.
But that doesn’t mean prices nationwide couldn’t still surge as more
news of the damage comes in. Highs close to $3 per gallon for regular gasoline
were already being reported in some parts of the country. Parts of New York
City were reporting diesel prices over $3 per gallon, according to
The Oil Price Information Service reported that wholesale prices for
fuel have already seen a spike of as much as 50 cents per gallon in some areas,
a number, the service said, will surely transfer to pump prices in the coming
Gov. Jeb Bush said Florida could see shortages of gasoline in the
coming days as a result of the storm. Bush said the state government is working
with the U.S. Department of Energy and the Petroleum industry to bring more
fuel in through the state’s ports.
that several refinery operators said their facilities in the Gulf region were
unhurt by the storm. However, eight refineries in southeast Louisiana were
closed as a result of the storm, while two others slowed their operations.
Relief may come if the federal government decides to release crude oil
from the Strategic Petroleum Reserve. The Bush administration has said it is
waiting on word from the refiners and oil companies before a decision would be
In addition, Saudi Arabia said Monday, Aug. 29, it would boost output
by 11 million barrels per day to help offset any shortages caused by Katrina.
However, analysts say adding oil to the market will not do much good if U.S.
refinery capacity is unavailable to process it.