Hurricane Could Push Up Gas Prices in California
Saturday, August 30, 2008 10:57 AM
Symbols: BP, CM, RIG, XOM
(Source: The Sacramento Bee)trackingBy Mark Glover, The Sacramento Bee, Calif.

Aug. 30--If you end up paying a tad more for gasoline at the pump this Labor Day weekend, blame Gustav.

AAA said Friday that the average price of regular unleaded gasoline nationwide jumped a penny -- from $3.66 a gallon to $3.67 -- overnight.

That marked the first increase in U.S. retail gas prices in 43 days. The national average peaked at an all-time high of $4.11 a gallon on July 17.

Analysts blamed Friday's blip on oil industry jitters over the uncertain path of Hurricane Gustav. If the storm rumbles into the Gulf of Mexico -- endangering a quarter of U.S. crude oil supplies and 40 percent of refining capacity -- things could get worse by Labor Day and beyond.

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

"The price consequences could be even worse this time," Jeff Rubin, chief economist at the CIBC World Markets investment bank, told the Associated Press. "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. As it advanced, oil companies were pulling employees off installations.

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

Transocean Inc., the world's largest offshore drilling contractor, said Friday it had evacuated about 400 workers from 11 offshore drilling rigs in the Gulf of Mexico. Transocean still has 1,150 workers in the region.

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

California has not reacted to Gustav's threat.

On Friday, the average price of regular unleaded throughout the state was $3.92, down from Thursday's average of $3.93. In Sacramento, AAA said the Thursday-to-Friday gas price average was unchanged, sitting on $3.84 a gallon.

"We're still not sure there won't be a bump up in prices, but it appears that this Labor Day (in California) is going to pass without much news," said AAA spokesman Michael Geeser. "Most of the prices around the country overnight were driven up in the Southeast and East Coast, which depend on oil from the Gulf Coast.

"I checked all the regions, and nobody had an overnight increase in the West."

However, Geeser said a Gustav rampage through the Gulf of Mexico could goose gas pump prices in California in the near future.

"It's going to depend on how much damage is done," he said. "What we learned with Katrina is that while refineries in the gulf are not supplying the West Coast, it does play a part in the supply-demand equation.

"That's because the Southeast and other regions that are affected start looking for oil where the spigot is open, and that can take away from the West. So, yes, it does play a part in a roundabout way."

As for the three-day holiday weekend, it appears fewer Californians will be burning up gasoline this year.

This week, AAA said its travel survey indicated that slightly more than 4.3 million Californians will travel 50 miles or more through Monday, a decrease of about 1.4 percent from last year. AAA cited high gas prices and uncertainty about the economy as contributing factors.

This time a year ago, the average price of unleaded regular statewide was $2.80. Nationwide, the average was $2.77.

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To see more of The Sacramento Bee, or to subscribe to the newspaper, go to http://www.sacbee.com.

Copyright (c) 2008, The Sacramento Bee, Calif.

Distributed by McClatchy-Tribune Information Services.

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BCM, CM, SC, RD, SHEL, XOM, BP, 5051, RIG,


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