By Mark Huffman
ConsumerAffairs.com
September 29, 2005
The other shoe, when it comes to gasoline prices, has yet to drop in the wake of Hurricane Rita. But that could be about to change as energy traders this week bet the fuel gauge would hit close to empty before damaged Gulf Coast refineries get back on line.
Gasoline futures for October delivery jumped 17.29 cents to close at $2.3393 a gallon Wednesday on the New York Mercantile Exchange. Thats the highest level since Sept. 1 and 72 percent higher than a year ago.
Your local gas station has not reacted. At least, not yet.
With the return to full operations of all Corpus Christi and San Antonio refineries Wednesday, 22.9 percent of the nations refinery capacity remains off-line, down from 23.4 on Tuesday, according to the American Petroleum Institute. The BP Texas City refinery, one of the largest in terms of daily output, has regained power but there is no estimate of when it might resume refining oil into gasoline.
The Valero/Texas City refinery, which produces just over 200,000 barrels of gasoline a day, has also restored power and should be operational by the end of this week. The largest of the refineries, Exxon-Mobil/Baytown, producing 550,000 barrels a day, is days away from being back on line, according to the API report.
Of three major pipelines, one is fully operational one is partially operational, and the third remains closed.
All of this creates a guessing game for gasoline wholesalers and the gas stations they serve. Nationwide, gasoline prices are down an average of $.20 a gallon since their post-Katrina peak, when distributors wasted no time in boosting prices in anticipation of shortages. That hasnt happened in the aftermath of Rita.
So, whats different this time? With intense scrutiny from regulators and consumers, outraged over the sudden increase last month, many wholesalers have felt added pressure not to adjust their prices until the shortages actually occur.
Whether those shortages occur depends on the outcome of a race underway between crews working to restore refineries and pipelines and consumers who are using gasoline. If consumers win this race, theyll lose at the gas pumps.
