Ike blows gasoline prices higher
— -- Wholesale gasoline prices rose Thursday as Hurricane Ike roared through the Gulf of Mexico, threatening Texas oil refineries and raising fears that prices at the pump could again climb to nosebleed territory — if only briefly.
Spot wholesale gasoline prices in the Gulf region hit a record $4.78 a gallon, up about $1.50 from Wednesday, says Tom Kloza, chief oil analyst at the Oil Price Information Service. Nationally, spot prices rose 50 cents to about $3.25.
If the storm shuts down Texas refineries for at least a week, retail gasoline prices, now about $3.67 a gallon, could blow past the $4.11 record set in July, Kloza says. But a return to stratospheric prices would likely last only until early October.
The storm, which is expected to pack at least 111-mile-per-hour winds when it makes landfall tonight or Saturday morning, has prompted the shutdown of much of the region's oil infrastructure. About a dozen Texas refineries — 17% of U.S. refining capacity — are shuttered, OPIS says.
Meanwhile, 97% of Gulf oil production and 93% of natural gas output has shut down, the U.S. Minerals Management Service says. Unlike Hurricane Gustav earlier this month, which did little damage to Louisiana oil production platforms, Ike is targeting refineries on Texas' central coast. "This storm is far bigger" and could cause surges up to 18 feet, creating far more damage, says Jim Rouiller, senior energy analyst for Planalytics, which studies weather's impact on business. Refineries, he says, could be down for as little as a week, but "it could be weeks, or even months," if the impact is severe. That could keep pump prices high for a while.
Valero Energy is shutting two Texas refineries. "We're concerned about losing electrical power and flooding," says spokesman Bill Day. Gear was moved higher after Katrina, but "you still worry about getting water in the plants."
Yet, if Ike does little or no damage, refiners and distributors will likely be reluctant to pass along the recent jump in wholesale prices, Kloza says.
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