Posted on 09/24/2005 12:25:17 PM PDT by RDTF
09.24.05, 10:00 AM ET
NEW YORK - Hurricane Rita turned out to have less punch that Katrina, but its impact will still be felt at the pump.
The storm made landfall at 3:30 a.m. EDT on Saturday as a category 3 storm just east of Sabine Pass, on the Texas-Louisiana line, bringing a 20-foot storm surge and up to 25 inches of rain, the National Hurricane Center said. Just before 8 a.m. EDT, the storm was downgraded to category 2.
-snip-
Gulf Coast refineries are built to withstand winds from a Category 5 hurricane and the real threat comes from the storm surge. Electrical equipment and seals left in standing water for an extended period are likely to be damaged and require replacement. The speed of the restart depends on how quickly the water recedes and how soon repair crews can get to the area.
Hurricane Rita veered east, and didn't strike Houston directly. That would have threatened major production centers.
But even if the damage is minimal, the impact will be felt nationwide. With refiners shutting down and assuming 4 million barrels per day of capacity is shut in for at least five days, the lost production would amount to 20 million barrels. Gasoline, currently the tightest product, with inventories 500,000 barrels below the five-year average, runs the greatest risk of price increases, analysts say.
(Excerpt) Read more at forbes.com ...
So is it just okay for gas stations to charge $7 a gallon for gas they paid $2.50 for, just because gas will be short for a couple of weeks?
Sure. You do have a week's consumption stored somewhere don't you?
more of the article:
But even if the damage is minimal, the impact will be felt nationwide. With refiners shutting down and assuming 4 million barrels per day of capacity is shut in for at least five days, the lost production would amount to 20 million barrels. Gasoline, currently the tightest product, with inventories 500,000 barrels below the five-year average, runs the greatest risk of price increases, analysts say. (See: "Rita Recovery May Be More Protracted Than Katrina's.")
The 21 refineries closed by the storm represent 27.5% of the total refining capability in the U.S., Platt's energy news service reported. Another 5% remains out of commission in the aftermath of Katrina. The U.S. Minerals Management Service on Thursday said that 605 platforms in the Gulf were unstaffed, compared with 469 on Wednesday. More than 90% of the region's oil production was blocked, while more than 65% of natural gas production was affected.
"Rita will have a significant impact on petroleum product markets even without significant damage similar to Hurricane Katrina," Merrill Lynch (nyse: MER - news - people ) analysts said on Friday.
The storms have exacerbated an already difficult situation for refiners. Unable to build new plants elsewhere in the country, refining companies like Valero Energy (nyse: VLO - news - people ), ConocoPhillips (nyse: COP - news - people ), Exxon Mobil (nyse: XOM - news - people ) and BP (nyse: BP - news - people )were already operating near capacity before Katrina and Rita (See: "Not In My Backyard").
The American Automobile Association's daily survey of prices on Friday pegged the national average for regular unleaded gasoline at $2.748 a gallon, $2.918 for midrange gas and $3.025 for premium. The average price for diesel is $2.826 a gallon. In Georgia, prices spiked above $5 a gallon on Friday, and some analysts said $6 or $7 levels would not be out of the question in some areas.
As for heating oil supplies in the Northeast, it's still too early to worry. Mid-Atlantic and New England residents should have adequate supplies if production resumes quickly.
if $7.00 turns to the cost to replace what they have, then . . .
They have to charge based on whether they will run out or not.
On Thursday I went to buy gas. Regular was advertised at 2.83. They were out of everything except super at 3.09.
This happened at another gas station that keeps low prices too.
And your facts are documented where?
Inquiring minds would like to know the facts.
I know I'll get flamed for this, but I think its okay for gas stations to serve their gas in 4, 6 and 8 ounce cups marked grande, supergrande and maximoso, make them vanilla-scented, and charge $20.00 an ounce.
So what are they supposed to buy the more expensive gas with, if they don't generate sufficient excess cash from their existing inventories now to pay for future purchases when prices go up on the next round?
Or maybe you'd rather see price controls. (LOL.)
P.S. I HATE high gas prices, and I am worried about my heating bills this winter (natural gas).
But I'd rather suck it up and let the market work than to have a bunch of stupid and useless regulations kick in to "control" the price of fuel just so grandstanding politicians can pander to their idiot constituencies.
I hope they are wrong, but just in case fill her up today
This isn't the worst of it. I read last week that a bunch of Commie shyster "lawyers" are preparing a lawsuit against the oil companies for causing hurricane Katrina. Since it's "BIG OIL" that is getting sued, expect some pedophile "judge" and a braindead Oprah jury to let the "lawyers" win the suit. Everyone in N'awlins will get a coupon for 10 gallons of gas, the "lawyers" will get their Swiss chalets and with matching BMWs for themselves and their girlfriends, the "judge" will get the young boy and we'll be paying 40 bucks a gallon for gas. Everyone that cheered when the extortionists stuck it to "BIG TOBACCO" are about to find out how it feels to get the old judicial shaft. Congratulations America and welcome to the club.
At $5 to $7 a gallon we are looking at serious inflation. With the steady rush of shocking economic events rocking the nation and the world I would not be surprised to see those price levels.
During this upcoming winter if the Iranian nuclear weapons threat is addressed, resulting in irrational actions by OPEC's Iran, disrupting energy supply flows other Gulf OPEC nations, the pump prices we pay now may look like 'cheap' in retrospect.
Depends on what the replacement cost is. If the replacement cost is $7/gallon, then it is legitamte. If, however, that $7/gallon is well-above replacement costs, than it is price-gouging, and not the kind of free-market capitalism I defend.
Right now, wholesale gas on the spot market is at $2.14/gallon. In NY, federal and state gas taxes are about 45 cents a gallon. Figure transportation costs are 30 cents a gallon (WSJ). Figure markup for profits of 15 cents a gallon (which is much more generous than gas stations get). By my estimate, gas should not exceed $3.04/gallon at the pump. Which, oddly enough, is higher than what they are now. It's clear the gas stations aren't price-gouging.
Now, whether the oil companies are price gouging in setting wholesale gas prices at $2.14 a gallon is another question entirely. Seeing how the oil companies are making record profits and investing it into their own stock, I suspect they may be.
'Refiners said it was too early to tell if they would be able to restart their plants quickly after their precautionary shutdowns ahead of the storm's arrival, but some were hopeful they would find little damage from Rita.
"Although the convoys have not yet arrived, reports from other individuals in the area indicate that we do have power at these refineries," leading U.S. refiner Valero Energy Corp. said about its Houston and Texas City plants.'
Could you educate someone from the Left Coast on what's the story with "heating bills"? If it is really such a problem, why not buy an extra wool sweater or blanket and keep the heater off?
I would. Gasoline will peak over $3.25, then gradually come back down to pre-Katrina levels within a week, when these refineries come back on line.
The problem with heating bills is that IIRC it cost me maybe $250/month to heat my modest home with natural gas during the winter five years ago, and this year I am bracing for $600 or more.
Turning your heat off may work on the balmy left coast, but try it in central Massachusetts in February and at the very least you can look forward to all your pipes freezing and then bursting. Not fun, I assure you.
sw
How cold does it get in the winter where you are? Most areas of the country suffer very cold temperatures Dec-Feb. I'm no expert but it would seem that most of modern housing is built without a fireplace or some other option for heating (think low income housing or even rental properties).
Well, if the furnace is off, then you burst the water pipes. Trust me, I lived thru the winter of 1978, with Carter as prez and it got so cold that it was deadly.
And you can only put on so many sweaters..
This should wake up all the bunny hugger about building more refinerys and start drill the hell out of ANWAR.
Pray for a Mild winter.....Please dear LORD>>>>
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