By David Koenig
The Associated Press
Dallas – Oil companies said Monday that damage to their massive Texas refineries from Hurricane Rita appeared lighter than expected, but analysts are still predicting that retail gasoline prices may remain near $3 a gallon for weeks or even months longer.
That’s a consequence of tight supplies and the fact that it may take weeks to restart all the closed refineries in Texas, Louisiana and Mississippi – more than a dozen in all. Combined with reports of Rita-related damage to rigs in the Gulf of Mexico, the idle refineries raised fears about shortfalls of heating oil and natural gas, fuels that people will use to warm their homes this winter.
That uncertainty was evident in energy markets Monday as crude-oil futures rose more than $1 a barrel and gasoline and natural-gas futures also climbed. Gas prices rose 5 cents a gallon nationally to $2.80 for unleaded, still far below the record of $3.06 reached Sept. 5.
“We didn’t dodge a bullet with Rita; we took a couple bullets in the legs with Katrina and Rita,” said Tom Kloza, an analyst with the Oil Price Information Service of Wall, N.J. “It’s still a significant loss, and it’s going to create some supply problems through at least mid-October.”
President Bush asked Americans on Monday not to drive if they don’t have to, and he said the government is prepared again to tap the Strategic Petroleum Reserve to ease pain at the pump. Later, Bush issued a presidential directive ordering hundreds of thousands of federal employees to cancel nonessential travel and to double up in carpools or use mass transit to get to work.
The good news was that retailers around the country said there was less panic buying than after Hurricane Katrina struck.
Normally by this time of year, refineries are beginning to shift production from gasoline to heating oil.
But analysts said oil companies will be under pressure from politicians and the public to produce enough gasoline to prevent shortages and keep prices from spiking much above $3 a gallon. That could push production of heating oil back later than usual, they said.
The loss of natural gas is potentially even more worrisome, analysts said, because disruptions to crude output can be offset by barrels from the rest of the world, plus the government’s emergency reserve.
There is no such safety valve for natural gas, and the country’s ability to import liquefied natural gas is limited.
Early estimates were that Hurricane Rita will cost U.S. refiners about 800,000 barrels a day in oil-refining capacity, on top of about 900,000 barrels a day still down as a result of Katrina.
