WASHINGTON -- Oil prices closed below $100 a barrel for the first time in more than six months Monday, but the lower crude prices aren't giving drivers relief.
One-fifth of the nation's refining capacity continued to be shut down as companies continued to assess damage and wait for electricity to return after Hurricane Ike. That fed supply concerns and boosted retail gasoline prices at the fastest pace in three years. There were reports of stations being out of gas.
The price of a barrel of crude oil for delivery in October dropped $5.47, or 5.4%, to $95.71. That was the lowest in seven months and the first time that light, sweet crude oil has closed below $100 since early March. The decline came amid expectations for continued low demand in the U.S., and early reports of limited storm damage to production in the Gulf and refining on the coast.
Since peaking at $145.29 at the close on July 3, oil prices have fallen more than 34%. But they are still up nearly $17 from a year ago.
"The market still looks like it wants to head lower," says Thomas Bentz, senior energy analyst at BNP Paribas Commodity Futures. Bentz says oil in the next few days may seesaw higher, but will likely be below $90 in the next few months.
Meanwhile, the nationwide average price of a gallon of regular gasoline was $3.835 Monday, up 18.7 cents from a week earlier, the Energy Information Administration said. That was the biggest one-week increase since the period following Hurricanes Katrina and Rita in 2005.
There were "sporadic" reports of stations out of gas, says Jeff Lenard, spokesman for the National Association of Convenience Stores, which represents many gasoline stations. Some station owners were having trouble getting gas, but others were not buying available fuel because of high wholesale prices, he says.
Fourteen refineries continued to be shut Monday, according to the Energy Department. The department said the refineries appear to have "suffered minimal damage." But American Petroleum Institute chief economist John Felmy says it will be at least a few more days before the Gulf refineries are running. The main issue is a lack of electricity. Firms not only need power to run the machinery within the refinery, but to operate pipelines. Plus, the process of restarting a refinery usually involves a number of safety checks, he says.
"Restarting a refinery is more than just flipping a switch," Felmy says.
Nearly all of the oil production and 93.8% of the natural gas output in the Gulf of Mexico remained shut off Monday.