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Gasoline Prices Drop Despite Refinery Outlook

Posted on: Thursday, 8 September 2005, 18:00 CDT

Sep. 8--Gasoline prices continued to head downward Wednesday even as the U.S. Energy Information Agency said damaged Gulf Coast refineries could be offline for "a matter of months."

The four refineries most affected by Hurricane Katrina represent about 900,000 barrels per day of refining capacity -- or about 5 percent of the country's average daily production.

Despite the news, crude oil and gasoline prices continued to fall Wednesday, both on Wall Street and on Oklahoma street corners.

AAA Oklahoma spokesman Chuck Mai said that the market probably already has anticipated the possibility of some longer-term damage to refinery capacity and that prices are going down because the situation is not as bad as was feared.

"I think we will see prices continue to come down because of a slackening of demand and higher inventories of crude," he said. "Plus, we have shiploads of gasoline and crude oil coming in from Europe."

Bruce Bell, chairman of the Mid-Continent Oil and Gas Association of Oklahoma, agreed prices probably will continue to fall, at least for a while.

He blamed much of the recent volatility on Wall Street traders who set the price of oil and gasoline futures by trading them like other stocks.

"The futures trading ramped the price up much higher than is reasonable, and now traders are betting the price will come back down," he said. "We ought to see the price drop further."

Crude oil lost $1.59 Wednesday to close at $64.37 on the New York Mercantile Exchange, down $5.10 -- or 7.3 percent -- since Sept. 1.

Wholesale gasoline lost about 3.3 cents to close at just more than $2.02, down 40 cents -- or 19 percent -- from Friday.

The slippage has led to lower retail prices throughout Oklahoma. Statewide, the average price of a gallon of regular unleaded gasoline sold for $2.992 Tuesday morning, according to AAA Oklahoma. The price was down from $3.06 on Friday.

The average price in Oklahoma City was nearly $3.02 on Wednesday, down from $3.06 on Monday. In Tulsa, the price fell to $2.97 on Wednesday, down from $3.18 on Friday.

Wednesday's government report did not specify which refineries are most affected, but it previously has been reported that Chevron Corp.'s 325,000 barrel-per-day refinery in Pascagoula, Miss., still is offline. Its main supplier has said orders have been canceled for at least a month.

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Copyright (c) 2005, The Daily Oklahoman

Distributed by Knight Ridder/Tribune Business News.

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CVX,

Source: The Daily Oklahoman

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