Pump price to rise as refineries to shut for weeks

By Tom Doggett

WASHINGTON (Reuters) – U.S. gasoline prices will rise in
the near term because as much as 15 percent of U.S. oil
refining capacity “could be out for at least another couple of
weeks” due to Hurricanes Rita and Katrina, the government’s top
energy forecasting agency said on Wednesday.

The refinery outages amount to lost production of about 1.3
million barrels per day (bpd) for gasoline, over 700,000 bpd
for distillate fuel and nearly 400,000 barrels bpd for jet
fuel, the Energy Information Administration said in its weekly
review of the oil market.

Water and wind damage to some of the refineries and the
lack of electrical power supply to others is preventing the
plants from immediately returning to service, the EIA said.

However, the agency said with “gasoline, distillate fuel
and crude oil inventories all at or above the average range for
this time of year, it appears that inventories, along with
increased product imports, may be sufficient to make up for
lost production due to refinery outages for a brief period.”

U.S. gasoline inventories jumped by 4.4 million barrels
last week, keeping stocks in the upper range for this time of
year, the EIA said. Gasoline imports averaged 1.2 million
barrels a day, up sharply from 938,000 bpd the week before.

Petroleum product prices, particularly for gasoline, are
expected to increase over the next few weeks because of the
shut refineries, the EIA said.

The national retail price for regular unleaded gasoline
increased slightly this week to $2.80 a gallon, below the
record $3.07 after Hurricane Katrina hit the Louisiana coast on
August 29.

Rita hit the Texas-Louisiana border last Saturday. Both
storms churned through the Gulf of Mexico, damaging offshore
oil and gas platforms.

“However, the longer these refineries remain shut down, the
more serious the situation becomes, particularly with the heart
of the winter season just a few months away,” the agency said.

Gasoline for October delivery settled up more than 17
cents, or 8 percent higher, to almost $2.34 a gallon at the New
York Mercantile Exchange on Wednesday .

The NYMEX price does not reflect the federal and state
excise taxes and manufacturing and marketing costs that
consumers pay at the pump.