Gas Prices Fall … But for How Long?
By Anonymous
Those record-breaking, $3-plus pump prices for regular unleaded gas that immediately followed Hurricane Katrina earlier this month have given way to prices about $2.55 a gallon in the Grand Forks area.
But Tropical Storm Rita may cause the price decline to stall, and possibly even reverse, to again approach $3 especially if the storm assaults the already-staggering Gulf Coast said North Dakota AAA spokesman Gene LaDoucer.
Gasoline prices are reacting to Monday’s $4 surge in crude-oil futures the biggest one-day price jump ever.
Rita is strengthening off the Bahamas and could hit U.S. oil facilities in the Gulf of Mexico later this week striking another blow at an industry struggling to recover from Hurricane Katrina.
The statewide average price of unleaded gasoline in North Dakota was at $2.77 a gallon, down from a record high of $3.15 just a week and a half ago.
“We were anticipating gas prices to continue drifting lower over the next week or two, until this hurricane developed,” AAA’s LaDoucer said from Fargo. “Now it’s just a matter of waiting to see where Hurricane Rita strikes.”
The swells in crude, heating oil and gasoline futures came as OPEC ministers met to discuss how to relieve price pressures in the oil market and expressed concern that Rita would bear down on the hurricane-ravaged U.S. Gulf Coast. The storm is threatening the coast just as gas prices had started to move downward after hitting record highs after Hurricane Katrina.
“We may not see any increase at the pump as the wholesale market may be able to absorb the initial increase (in crude oil prices),” LaDoucer said. “But if the storm should strengthen and turn towards any of the oil producing areas of the coast, we could see gas prices move higher again, potentially to the $3 area.”
If Rita strikes Texas, the biggest oil refiner in the country, it could spell serious disruption to the industry. Texas has 26 petroleum refineries, most of which are located along the coast, with the capacity to pump 4.6 million barrels a day. That’s more than a quarter of the U.S. total refining capacity, according to the U.S. Department of Energy.
Benchmark light, sweet crude for October delivery rose $4.39, or 7 percent to settle at $67.39 a barrel on the New York Mercantile Exchange.
Nymex crude – still more than $3 off its all-time high of $70.85 hit briefly Aug. 30 after Katrina hit the Gulf – had fallen $1.75 on Friday to its lowest closing price since Aug. 5.
Heating oil surged more than 20 cents to $2.0384 a gallon, while gasoline rose nearly 26 cents to $2.0427 a gallon.
Brent crude for October rose $3.80 to $65.61 on London’s International Petroleum Exchange.
“The main driver today is Tropical Storm Rita. We really can’t afford to lose more production,” said Phil Flynn, analyst at Alaron Trading Corp. in Chicago.
Natural gas futures also soared Monday, rising $1.519 to settle at a new high of $12.663 per million British thermal units.
About 55 percent of oil Production and 35 percent of gasoline production in the Gulf remains blocked in the wake of Hurricane Katrina, the Minerals Management Service said Monday.
OPEC minister ministers sought to reassure oil markets that supplies are plentiful. The ministers appeared near agreement to make 2 million extra barrels of oil a day available – a move aimed at easing fears over an expected spike in demand as the winter heating season approaches. They were to decide today whether to offer the extra oil or boost the current output ceiling of 28 million barrels a day by 500,000 barrels.
Previous OPEC pledges have done little to stabilize prices this year, which spiked on concerns that there is little spare crude left from rising demand. but officials and analysts have also blamed high prices on the lack of refinery capacity to process products.
Copyright Grand Forks Herald Inc. Sep 20, 2005