SAN ANTONIO, Texas -- Motorists far from the Gulf Coast on Sunday continued to feel the ripple effects from Hurricane Ike's trek through refinery-rich Texas, reported The Los Angeles Times, as the cost of gasoline throughout the Midwest and East leaped higher, going above $5 a gallon at a growing number of stations.
The $5-plus stations were not all that common, but they provided an exclamation point to Ike's effect on gasoline prices, said the report. Weekend jumps of 30 to 60 cents were not out of the ordinary in some regions and helped kick the nationwide average cost of self-serve [image-nocss] regular to $3.795 a gallon Sunday, a 12-cent hike since Friday.
Five states—Georgia, Illinois, Indiana, Michigan and South Carolina—joined usually high-cost Alaska and Hawaii with statewide averages above $4 a gallon. In South Carolina, the average price hit a record high.
The vagaries of pipeline operations and the timing of fuel deliveries created price disparities in many markets. In Tennessee, price spotters for GasBuddy.com reported that a Shell station in Clinton was selling regular for $5.09 a gallon Sunday, while another Shell in the same city carried regular at $4.79 a gallon.
Though some consumers and state officials hinted that stations could be gouging customers (see related story in this issue of CSP Daily News), Tom Kloza, chief oil analyst at the Oil Price Information Service, said the higher prices probably were based on wholesale gas prices that jumped in the Gulf Coast before Ike hit land.
Stations raised their street prices when they got fuel deliveries pegged to the higher wholesale prices, he said. "Their next deliveries were at $4.50 a gallon…. It's one of the reasons you see these huge disparities in price."
Large oil companies have deep pockets, allowing them to sell gasoline to their dealers at less than the going price, but independent operators are charged full price immediately and have to pass the increase on to customers, Kloza said. (Click here to read Kloza's blog.)
The high prices should be relatively short-lived because Ike didn't deliver the debilitating blow to refineries, pipelines and ports that some had feared. Restarting those operations, however, will depend mostly on restoring power to the facilities.
Government officials reported that at least 10 oil platforms were destroyed, said the report, the first indication that Ike delivered far more damage offshore than Hurricane Gustav did. But with refineries still down and U.S. fuel demand in decline, oil production is less crucial right now.
"We're going to be coughing and wheezing in terms of supply for a couple weeks or so," Kloza said. "A lot of days of [fuel] production were lost." Even so, he said, "by Wednesday or Thursday, it's not going to be a big story."
The cost of oil for October delivery fell as low as $98.46 a barrel, but by late Sunday it had rebounded to $99.61, the report said. On Friday, oil briefly traded below $100 for the first time in more than five months but closed at $101.18.
In Texas, 14 refineries remained closed Sunday, representing about 20% of the nation's oil-processing capacity. But a growing number of refiners were reporting that their plants sustained little or no damage from the hurricane. Pipeline operations, also shut down as a precaution, were restarting Sunday. But with refineries still down, fuel deliveries to the Northeast, Southeast and Midwest were slowed, according to the newspaper.
Nearly all Gulf of Mexico oil and natural gas production remained shuttered Sunday, the L.A. Times said, citing government reports.
Valero Energy Corp. restored power to its Houston refinery on Sunday, but the plant remains shut down, as do the company's plants in Texas City and Port Arthur, spokesperson Bill Day told The San Antonio Express. Valero, based in San Antonio, is working on plans to restart the plants, he said, but it does not yet have a timetable for when the startups will begin or how long they will take.
Shell Oil's Motiva unit said Sunday that Hurricane Ike damaged its terminal in Houston, but that its Pasadena terminal near Houston did not have major damage and is open. The company was in the process of reviewing operations at its Beaumont terminal and expected it to open Sunday.
Terminals dispense fuel to tanker trucks for distribution to retail stations, said the report.
The U.S. Department of Energy (DOE) said it would deliver 200,000 barrels of oil from the Strategic Petroleum Reserve (SPR) to ConocoPhillips' Wood River, Ill., refinery in exchange for oil at a later date, according to the report. After Gustav, the agency provided oil from the reserve to Placid Refining Co.'s refinery in Port Allen, La., and to refineries owned by Marathon Oil Corp. (Click here for DOE updates.)
For more analysis concerning Ike's impact on gasoline prices,click here for the most recent column from Lundberg.
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