Posted on 09/01/2005 11:18:35 AM PDT by AntiGuv
WASHINGTON (Reuters) - The government warned on Thursday that some U.S. refineries shut by Hurricane Katrina may not resume processing oil for several months and a consumer group said such market conditions justified gasoline at $3 a gallon.
"Some refineries likely (will be) able to restart their operations within the next 1 to 2 weeks, while others will likely be down for a more extended period, possibly several months," the Energy Information Administration said.
The Energy Department's analytical arm said nine major oil refineries in Louisiana and Mississippi remained shut from the hurricane. Those refineries account for about 11 percent of total U.S. refining capacity.
"Unlike 2004's Hurricane Ivan, which affected oil production facilities and had a lasting impact on crude oil production in the Gulf of Mexico, it appears that Hurricane Katrina may have a more lasting impact on refinery production and the distribution system," the EIA said in its most recent update on the effects of the hurricane on the energy sector.
With less production of gasoline, motor fuel prices have jumped around the country to near or above $3 a gallon, with pump prices in Atlanta topping $5.
President George W. Bush earlier Thursday urged Americans to conserve gasoline while supplies are disrupted, and promised the government would go after oil companies that gouged consumers at the pump with high prices.
The Consumer Federation of America, which is normally a critic of Big Oil, said on Thursday that $3 gasoline was justified, given current market conditions.
The group pointed out that with many refineries shut, major pipelines not working and gasoline demand up as drivers top off their tanks due to fears of supply shortages, higher prices should be expected.
However, Mark Cooper, the group's research director, said the U.S. oil industry is controlled by a few big companies and the supply-and-demand forces that set fuel prices "are not very consumer-friendly."
He said some retailers were likely using the hurricane to gouge consumers at the pump, but such cases would be difficult to prove.
Two congressional committees will hold separate hearings next week on the jump in gasoline prices and the impact on oil refining capacity after the hurricane.
Don't worry, the whiners, and the tinfoil hat eeevil conspiracy, "give us free gas" conservatives will be here shortly. {sigh}
I think that people will be shocked by how quickly those refineries are going to be back up and running. Every minute they are shut down costs their owners millions of dollars. Free enterprise will take care of this.
Just proves the foolhardiness of running insufficient refinery capacity, and of relegating the refineries to just a handful of places.
Did someone say "free gas"?
=p
While there hasn't been a new refinery built in America since 1976...
Look for motorcycle sales to jump through the roof!
This may take a while to repair.
Maybe the country will reconsider building more refineries??
Naahhhhh....
That's what we need - hearings!
I think the refinery problems might be a blessing in disguise. Let the price rise to $4 or $5 a gallon. People will change their lifestyles, and the silent majority might actually speak out and actually persuade Congress to do something.
Free gas with a 6 pack of canned frijoles...some processing delay involved!
Want free gas? Eat beans. We're going to be paying $3+ for gas for a long time. Heating oil is going to kill the northeast this year. We're going to start getting some old-fashioned stagflation. I hope Greenspan doesn't try raising interest rates again.
Katrina is one hell of a hard hit -- for the nation as a whole and the economy in particular. I pray that the jihadists don't take advantage of the situation to launch an attack.
That's what I mean. Congress needs to roll back the obsticles that it put in place to prevent domestic drill and refining.
I heard that two refineries are under water. Free enterprise that.
This is going to hurt everyone's pocket a bit, but it will help develop domestic reserves and hopefully, more refining capacity. At least people are taking a solid look at the alternatives they have just paid lip service to before.
I doubt the jihadis will be after us right now, just because they want all the headlines to themselves. Terror-ism is that way, it relies more on terror than actual damage to be effective.
People really do need to adjust lifestyles. Do we need to get in the car to drive three blocks to post office or video store. I started riding my bicycle and enjoy it immensely. But the area I live in isn't too hilly.
Think of the choice oil companies face:
I can refrain from building new refineries, and keep prices high. Or I can build spend enormous sums of money building capital-intensive refineries, fight lots of opposition to do it, and get less money for each gallon of refined product I sell.
And if I am BP, I can buy politically correct ads that make me look like the biggest environmentalist that ever lived, so liberal will think well of me and teachers will tell students they should like me.
Would you mind running to the store for me?
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