Gas prices could reach $5 with hurricane

[Cygnus]

http://www.msnbc.msn.com/id/12400801/
Gas prices edge up before Labor Day weekend
Analysts warn hit on infrastructure by Gustav may send gas to $5 a gallon

Retail gas prices swung higher Friday — the first increase in 43 days — as analysts warned that a direct hit on U.S. energy infrastructure by Hurricane Gustav could send pump prices hurtling toward $5 a gallon.

Meanwhile, oil prices ended the day slightly lower, falling for a second straight session. But prices fluctuated sharply as some traders feared supply disruptions and others bet the government will release supplies from the Strategic Petroleum Reserve if Gustav wreaks havoc in the Gulf of Mexico area — home to a quarter of U.S. crude supplies and 40 percent of refining capacity.

Gustav, which regained hurricane strength Friday, was spinning away from Jamaica on a course toward Gulf Coast states including Louisiana — three years to the day since Hurricane Katrina slammed into the state and tore up oil rigs and refineries.

Fears of another monster storm have sent wholesale gasoline prices shooting up in the Gulf region, forcing filling stations to pass on the costs by raising pump prices ahead of Labor Day weekend.

A gallon of regular gasoline jumped about a penny overnight to a national average of $3.669, according to auto club AAA, the Oil Price Information Service and Wright Express.

That’s the first increase since prices peaked at an average $4.114 a gallon on July 17, an all-time high.

Jeff Rubin, chief economist at investment bank CIBC World Markets, said that record could be shattered if Gustav seriously disrupts offshore energy production.

In 2005, pump prices jumped from slightly more than $2 a gallon to above $3 after Katrina and Hurricane Rita destroyed more than 100 oil platforms and damaged several refineries.

“The price consequences could be even worse this time,” Rubin said in a report, noting that oil and gasoline inventories are lower than when Katrina and Rita hit. “Any replays of the 2005 storm season could see gasoline prices soar to $5 per gallon.”

Gustav was moving northwest of Jamaica toward the Cayman Islands after triggering floods and killing 59 people in Haiti and eight more in the Dominican Republic.

Light, sweet crude for October delivery fell 13 cents to settle $115.46 a barrel on the New York Mercantile Exchange, after earlier rising as high as $118.76. On Thursday, prices fell $2.56 at $115.59 a barrel, the first time this week it closed lower.

Analysts attributed the volatility to doubts over whether Gustav will affect offshore energy production, as well as speculation that the Energy Department will tap the Strategic Petroleum Reserve should the storm threatens supplies.

“Until this hurricane hits, the trend has to be higher toward the $120 level,” said Jonathan Kornafel, Asia director for brokerage Hudson Capital Energy in Singapore. “If this turns out to be a nonevent, the market could really come roaring back down.”

As Gustav advanced, oil companies were pulling employees off installations.

Royal Dutch Shell PLC has evacuated nearly 670 workers. The company said production will be affected. BP PLC was also removing personnel from the region, while Exxon Mobil said it was bracing its structures for heavy wind and rain.

Transocean Inc., the world’s largest offshore drilling contractor, said Thursday it had evacuated about 190 workers from five of its 11 offshore drilling rigs in the Gulf. Transocean has 1,550 workers in the region.

Weather research firm Planalytics predicted as much as 80 percent of the Gulf’s oil and gas production could be shut down as a precaution if Gustav enters the region as a major storm.

Forecasters said Gustav might slip between Mexico’s Yucatan Peninsula and the western tip of Cuba on Sunday, then march toward a Tuesday collision with the U.S. Gulf Coast — anywhere from south Texas to the Florida panhandle.

“It seems there will be at the very least a slight hit to production,” Kornafel said. “But everything is up in the air until Monday or Tuesday.”

Gustav is the first storm of the 2008 Atlantic hurricane season to pose a serious threat to offshore oil and gas installations in the Gulf.

Some analysts, however, noted that lower appetite for oil products in the United States could well dampen Gustav’s effect on the Gulf area’s oil output.

“U.S. oil demand is currently 1.6 million barrels a day lower than when Katrina struck,” said Olivier Jakob of Petromatrix in Switzerland. “There is today more U.S. refining capacity offline for economic reasons than can be destroyed by Gustav.”

In other Nymex trading, heating oil lost 0.07 cent to settle at $3.1819 a gallon, while gasoline fell 1.15 cents to settle at $3.0099 a gallon. Natural gas fell 10.7 cents to settle at $7.943 per 1,000 cubic feet.

In London, October Brent crude fell 12 cents to settle at $114.05 a barrel.

[Loves2Watch]

Just another in a long line of excuses for Big Oil to rape the consumer.

[Nexgenrulz]

Originally Posted by Loves2Watch

Just another in a long line of excuses for Big Oil to rape the consumer.

Nancy Pelosi is the only excuse I can think of!!

[Cygnus]

Hurricane was not as bad as expected. Oil prices actually dropped today. However I heard on the radio that a million drivers in china will be on the road again since the olympics are over.

[F91]

Dude- seriously!!! Come on.... You are smarter than that.

Originally Posted by Nexgenrulz

Nancy Pelosi is the only excuse I can think of!!

[Nexgenrulz]

Originally Posted by F91

Dude- seriously!!! Come on.... You are smarter than that.

Come on man, you know as well as I do, that Pelosi won't allow a vote on offshore drilling. Why won't she allow it? That to me is ridiculous. Last time I checked the House belongs to the people, not Pelosi!! More oil=cheaper gas!!! Law of supply & demand!!

[Poorboy]

I'm gonna drill here and I gonna drill now!, unless I just stand here in the middle of a tv screen and kiss the women. 3500+ platforms survived this one, how many more they need? 246,650 more ain't enough, only = 1/2 million. Gov't only works in million, billion and trillions.!

[Nexgenrulz]

Originally Posted by Poorboy

I'm gonna drill here and I gonna drill now!, unless I just stand here in the middle of a tv screen and kiss the women. 3500+ platforms survived this one, how many more they need? 246,650 more ain't enough, only = 1/2 million. Gov't only works in million, billion and trillions.!

Huh?

[glennb1]

I was never worried it would be $5/gallon.

Only idiots believe crap like this and panic about it.

[kbaker2002de]

Originally Posted by Loves2Watch

Just another in a long line of excuses for Big Oil to rape the consumer.

Big Oil is making tons of cash becasue they are making a net profit maring of about 8.5% on a raw material that has increased 200% in the last 10 years or so. Many want them to cut their margins, but that would not be prudent becasue they still need the cashflow to purchase the ungodly expensive oil to refine.

Everyone is aware we do not have the most oil in the world, but we do have some oil we are not tapping, it is fairly easy to get, and as long as oil is above like $40 a barrel it is profitable to the goverment (royalties and taxes), the customer (lower fuel costs, increased jobs here in the US). What we cannot do is take our eye off the ball (as we are wanton to do) in the event of a collapse or otherwise significant drop in the oil price. In the long run, we need a source of energy (coal, NG, solar, wind, hydro, nuclear and oil) that we can be more if not totally independent of foriegn energy sources.

Government CANNOT do this, only the people and American ingenuity. I would love to see billionares like Soros and the Virgin Airs guy put their money where their mouth is to invest in an ECONOMICALLY COMPETITIVE alternative energy source.

[tipstir]

With the current price of $3.53 I still pay almost $40-$50 for 13 gallons of unleaded gas. I still got 4 more gallons left. Still all adds up. $4, $5, $6 if you all going to pay it anyway later or sooner. What else are you going to do? FCV - Fuel Cell Cars are still in testing phase and still expensive. NGV are out but as state cars. All Electric due out 2010 to be sold at Toyota. Promise of flying Fusion cell cars never came to light when I was a kid going up. We're still stuck with the same gas and poor mileage cars. I had drove 35 city and 45 highway with 10 gallon tank using unleaded gas. Had that car back in the 80's until 1996. Still would have that car if I could get parts in the states for it.

[johncena]

Hi this is johncena.Its really to bad hear that gas prices could reach$5.Hurricane was not as bad as expected. Oil prices actually dropped today. However I heard on the radio that a million drivers in china will be on the road again since the Olympics are ove.I think its costly for public.
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johncena

[johncena]

With the current price of $3.53 I still pay almost $40-$50 for 13 gallons of unleaded gas. I still got 4 more gallons left. Still all adds up. $4, $5, $6 if you all going to pay it anyway later or sooner.
================
johncena

[johncena]

Big Oil is making tons of cash becasue they are making a net profit maring of about 8.5% on a raw material that has increased 200% in the last 10 years or so. Many want them to cut their margins, but that would not be prudent becasue they still need the cashflow to purchase the ungodly expensive oil to refine.
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johncena

[johncena]

I was never worried it would be $5/gallon.
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johncena