September 14, 2008 in Nation/World

Hurricane curbs energy production

Gas prices hit $5 in some areas
By Nancy Trejos and Spencer Hsu Washington Post

WASHINGTON – It didn’t take long for consumers to feel the impact of Hurricane Ike at the gas pumps.

Nationwide, the average price per gallon of regular unleaded gas jumped to $3.73 Saturday from $3.68 the day before, as about a quarter of U.S. energy production remained out of commission.

Across the country, particularly near the storm’s path, there were reports of price gouging as retailers wondered when their next shipments would arrive. John B. Townsend II, a spokesman for AAA Mid-Atlantic, said some areas saw gas prices climb by as much as $1 because of the shutdown of offshore platforms and drilling rigs along the Gulf of Mexico and oil refineries. There were reports of prices topping $4 in the Carolinas, he said.

Along the Gulf Coast, “prices have jumped in some cases to $5, and that’s unconscionable,” he said.

In brief comments Saturday at the White House, President Bush warned against price gouging.

“The Department of Energy, the Federal Trade Commission and, I know, state authorities will be monitoring gasoline prices to make sure consumers are not being gouged, make sure consumers are being treated fairly,” he said.

The nation’s leading oil producers, including Exxon Mobil and Shell, said it was too early to assess the damage to refineries and other operations, but power outages were posing problems for refiners all across the region. Valero Energy, the nation’s largest refiner, reported that power was out at its Houston, Texas City and Port Arthur refineries, which it had closed in anticipation of the storm. The company said Saturday night that assessment crews found no significant structural damage to the facilities.

The storm also led to the shutdown of several pipelines, including the Colonial Pipeline, which transports fuel from the Gulf Coast through cities along the Eastern Seaboard. Steve Baker, a spokesman for Colonial, said the company’s Houston area stations had lost power and that two pipelines, one carrying gas and one carrying distillates such as diesel fuel and home heating oil, were shut down.

The Interior Department’s Minerals Management Service said it had confirmed reports of two drilling rigs adrift in the central Gulf of Mexico. The agency, along with the U.S. Coast Guard, was monitoring the paths of the rigs.

The storm illustrated the region’s significance to the nation’s oil supply. About 40 percent of U.S. oil refining capacity lies along the coast, with about 23 percent along the Texas Gulf Coast.

As of Saturday afternoon, 99.7 percent of the oil production and 98.5 percent of the natural gas production in the gulf were shut down, according to the Minerals Management Service.

Concerned about gasoline availability and prices, Bush said the Environmental Protection Agency has temporarily waived some provisions in 12 states across the region so that they can import gasoline from abroad that normally would not meet some U.S. requirements.

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