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Oil Prices Climb As Output is Disrupted

Posted on: Wednesday, 31 August 2005, 03:01 CDT

Hurricane Katrina disrupted Gulf Coast petroleum output and rattled energy markets Monday, sending oil and natural gas prices soaring and setting the stage for a spike in the retail cost of gasoline.

By the end of the day, more than 700 offshore platforms and rigs had been evacuated, two rigs had drifted away, and authorities in Alabama were forced to close a bridge over the Mobile River after it was struck by a runaway platform. Oil futures briefly climbed above $70 a barrel for the first time.

The powerful hurricane roiled the industry at a time when producers worldwide were already struggling to keep up with strong demand, and it threatened to constrain the supply of home heating fuels this winter. The rise in energy prices has already slowed the U.S. economy's growth rate, though domestic fuel consumption is still rising.

The Bush administration said it would consider lending oil from the nation's emergency stockpile to refiners that request it - Citgo Petroleum Corp. asked for 250,000 to 500,000 barrels to ensure its Lake Charles, La., refinery does not run out - and the president of OPEC said he will propose a production increase of 500,000 barrels a day at the cartel's meeting next month. Analysts nervously awaited details on the extent of the damage to the region's platforms, pipelines, refineries and electric grid.

"We're losing a lot of crude oil and also a lot of natural gas," said Lawrence J. Goldstein, the president of the New York-based nonprofit Petroleum Industry Research Foundation. Mr. Goldstein estimated that total refinery production of gasoline, heating oil, diesel and other fuels could fall by as much as 20 million barrels during the next 60 days.

Source: Augusta Chronicle, The

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