Everybody knows what the damage to oil refineries and rigs caused by Hurricane Katrina is doing to prices at the pump. But the Department of Energy said it could have a big effect on prices for heating oil and natural gas as well.
In its Short-Term Energy Outlook, issued Wednesday, Sept. 7, the DOE said that oil and natural gas production in the Gulf of Mexico are currently down by 58 and 42 percent of their normal levels, respectively.
The DOE officials said there are too many unknown factors right now - including the recovery rate from Katrina and the possibility of other storms - to accurately predict what will happen with heating oil and natural gas as the winter months approach.
However, the report estimates that natural gas prices could rise by anywhere from 37 to 50 percent, depending on speed of recovery from Katrina. Higher prices can be expected in areas where heating demands are likely to be the highest. In the Midwest, for example, prices could rise as much as 71 percent.
Heating oil prices, meanwhile, are projected to be about 31 percent higher this winter compared to last winter. That rate could fluctuate by as much as 2 or 3 percent in either direction, depending on the rate of recovery from Katrina.