Monday, September 1, 2008

Gustav Gusher

You know the drill, readers.

"Hurricane shutters refineries on Gulf Coast" by Associated Press | September 1, 2008

HOUSTON - Hurricane Gustav's threat to the Gulf Coast halted about 15 percent of US refining capacity yesterday, though for now prices at the pump have not risen dramatically.

However, analysts and others say a prolonged disruption in refining operations could cause price spikes of 20 cents per gallon or more, not unlike the surges after hurricanes Katrina and Rita devastated the region's energy infrastructure three years ago.

A gallon of regular gasoline jumped one-half cent overnight to a national average of $3.687, auto club AAA reported yesterday. The price rose slightly more than a penny Saturday.

Kenneth Medlock, an energy specialist and adjunct economics professor at Rice University, said a concern is Gustav lingering after it makes landfall and dumping massive amounts of rain on the region.

"That could keep a lot of those refineries shut down for awhile because you have to deal with flooding and power outages," Medlock said. "If that capacity remains shut down for an extended amount of time, you could see prices really start to rise. Four-dollar [gasoline] is not out of the question.