Gasoline cracked the $3 level for unleaded regular in metro Denver for the first time Wednesday as damage from Hurricane Katrina continued to cripple energy markets.
At least eight refineries along the Gulf of Mexico remained closed, squeezing already-tight gasoline supplies and sending prices across the nation soaring.
Crude-oil prices dropped off record highs as the government said it would loan from the Strategic Petroleum Reserve at least 1.5 million barrels of oil to Gulf Coast refiners. Yet the move did nothing to alleviate gasoline prices that have risen as much as 40 cents a gallon this week at some Colorado stations.
Most Denver-area stations stayed below the $3 threshold Wednesday, although analysts said more outlets may breach the level as wholesale gasoline prices continue to rise.
“It’s not a very good feeling,” said Roger Rarick of Lone Tree, who filled up Wednesday with $3.10 regular gasoline in the Denver Tech Center. “This is really starting to get expensive. I’m not taking any long trips, that’s for sure.”
Reports surfaced in some U.S. markets of gasoline supply shortages, hoarding and waiting lines at stations. Although Colorado inventories are tight, analysts said motorists encountered virtually no problems with supplies or lines.
“My supplies are OK for now, but who knows what’s going to happen next week?” said Tom Greenlee, owner of a Sinclair station in the Denver Tech Center. “This is a rough time in this business. We’re just as grumpy as the customers are.”
An informal survey of metro-area stations showed many selling self- service regular Wednesday afternoon at $2.799 and $2.899, and a few at $2.999.
Greenlee’s Sinclair station at Interstate 25 and East Belleview Avenue raised its regular price from $2.899 Tuesday to $3.099 Wednesday.
An independent dealer in Golden priced regular at $3.499 Wednesday in what its manager said was a symbolic protest against profiteering and anti- competitive practices by major oil companies.
“It’s a protest,” said George Lee, manager of the Jackson Street Station in Golden. “We don’t like these prices any more than Joe Blow. We’re tired of selling gas and losing money and fighting with the corporate world over pennies. I’d rather just sell food and fix cars.”
Lee said major oil companies are attempting to squeeze independent stations out of business by favoring branded stations with scarce gasoline and pricing it at below-market levels. He said about a dozen customers gassed up at his station Wednesday, mostly friends showing support for his dilemma.
Denver prices for high-octane premium were well above $3 at many stations. And in mountain resorts, prices soared to new highs. A Shell station in Aspen was charging $3.299 for regular, while prices in Glenwood Springs ranged from $3.119 to $3.159.
To boost national supplies, the U.S. government said it would lend oil to refiners facing shortfalls and relax environmental restrictions on the type of gasoline sold during summer. Crude oil for October delivery closed at $68.94 a barrel, down 87 cents, on the New York Mercantile Exchange.
Just how bad the situation becomes for motorists depends on how quickly electricity can be restored to Gulf Coast pipelines and refineries, analysts said. Flooding may have left some important refinery equipment submerged, and it will be days before a full damage assessment is completed, industry officials and analysts said.
Regaining full production from refineries “is a question of weeks or perhaps even months,” said Colorado State University finance professor Sanjay Ramchander. “The supply shock may linger through the winter.”
Industry observers said retail gasoline could become much more expensive, with shortages appearing in some parts of the country.
“I wouldn’t rule out $4 a gallon,” said Marshall Steeves, an energy analyst with Refco Group. “There is a definite possibility of sporadic and regional shortages.”
The Associated Press and the Chicago Tribune contributed to this report.
Staff writer Steve Raabe can be reached at 303-820-1948 or sraabe@denverpost.com.
