CHICAGO -- Americans are paying more for their gasoline than at any point since the Iran-Iraq war, after adjusting for inflation, and prices may continue to climb.
Refinery shutdowns from Hurricane Katrina will push prices at the pump to $3.50 or $4 a gallon, said Charles Maxwell, senior energy analyst at Weeden & Co. in Greenwich, Connecticut. The average U.S. retail price jumped 45 cents last week to $3.057 a gallon, according to AAA, the largest motorists' organization. Gasoline prices in 1981, after the revolution in Iran and during that country's war with Iraq, equaled $3.14 in today's dollars.
Plants on the Gulf Coast of Mississippi and near New Orleans may be off line for six months to a year, according to Kinetic Analysis Corp. of Savannah, Georgia, which uses computer models to assess natural disasters. A ConocoPhillips plant in Belle Chasse, Louisiana, probably had the worst damage, the firm said.
``I've never seen anything as devastating to the refining industry,'' said Dan Robinson, 57, president of Placid Refining Co. LLC, which operates a refinery near Baton Rouge, Louisiana. ``This is going to cause the refining capacity in this area to be down a lot longer than it has ever been.''
Exxon Mobil Corp. said yesterday it hadn't been able to complete an inspection of its 190,000 barrel-per-day refinery in Chalmette, Louisiana, just east of New Orleans. ConocoPhillips and other refinery owners said they can't yet estimate when plants will return to service.
Gasoline prices on average slipped to $3.041 a gallon in the AAA survey released today on its Web site. Washington, D.C., was the highest at $3.346 a gallon and Louisiana the lowest at $2.741.
Seven in 10 Americans say the rise in oil prices is causing them hardship, according to a CNN/USA Today/Gallup poll. The survey was taken Aug. 28-30, before the full effect of Hurricane Katrina was felt and before the Bush administration said the government would tap the Strategic Petroleum Reserve.
David Michurin, a 63-year-old retired electronics repairman from Norton, Massachusetts, said high gas prices prompted him and his wife to take the train into Boston yesterday to sightsee at Faneuil Hall rather than drive. It doesn't pay to shop around for gas because the stations near his home are all charging similar prices, about $3.25, he said.
``With gas prices being what they are, we're planning to drive a lot less,'' Michurin said.
The same CNN/USA Today/Gallup poll found 76 percent of the public disapproves of the way President George W. Bush is handling gasoline prices, up from 67 percent who disapproved at the end of April. A majority, 52 percent, disapprove of the way Bush is handling the presidency. The poll sampled 1,007 adults. The error margin is plus or minus 3 percentage points.
Four refineries took the worst blow from Katrina, according to a report form RBC Capital Markets analyst Joseph D. Allman. They are the ConocoPhillips plant; Chevron Corp.'s Pascagoula, Mississippi, refinery; Murphy Oil Corp.'s Meraux, Louisiana, facility; and the Chalmette facility, which is a joint venture of Exxon Mobil and Petroleos de Venezuela SA.
Having these four plants shut down would keep U.S. fuel output at least 5 percent below pre-storm levels that barely kept pace with demand.
Chevron is erecting a ``tent city'' at the Pascagoula, refinery for 1,500 workers and family members left homeless by the storm. Pascagoula was out of service for more than two months after Hurricane Georges flooded the plant with three to four feet of water in September 1998.
``There's no power in the area and we're still assessing the damage,'' Chevron spokesman Michael Barrett said in a phone interview yesterday. Lack of phone service is also hampering efforts by the San Ramon, California-based company, he said. Chevron is the second-largest U.S. oil company after Exxon Mobil
The Chalmette and Meraux refineries are in St. Bernard parish, an area that was flooded along with New Orleans when the levees failed.
The Meraux plant was accessible only by boat late last week, according to Murphy Oil spokeswoman Mindy West. ``You can't drive in, because they won't let you use any of the bridges until they can verify their soundness,'' she said. ``So for now, we're having to operate via the river.''
Even after power is restored, floodwaters are pumped out and employees are allowed to return to evacuated areas, refinery repairs will be stalled by a shortage of contractors to replace damaged pipes and other equipment, said Chuck Watson, president of research and development at Kinetic Analysis.
Those four refineries have a combined crude processing capacity of about 887,000 barrels a day, or 5.2 percent of total U.S. capacity. Repairing damage to those plants will take months during a time when the U.S. refining system was already straining to keep pace with record fuel consumption.
The U.S. has 144 operating refineries with capacity to process 17 million barrels of oil a day, according to the Energy Department. They were running nearly flat out before Katrina to keep pace with unexpectedly strong demand. The U.S. Energy Department said U.S. fuel-making facilities were at 97 percent of capacity in the week before Katrina hit.
President Bush said last week that the effect of Katrina on U.S. energy supplies will be lasting. ``Don't buy gas if you don't need it,'' he said.
Bush Energy Secretary Samuel Bodman said in an interview last week that a portion of the refineries that were shut by Katrina would start up in the next few weeks. ``The others, my guess is it's going to take a month, if not longer, because they will require significant rebuilding.''
PIN/Bloomberg
News ID 63997
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