Another cheerful thought:
Gas may hit $4 by year-end
Energy studies center says there is 'no solution in sight,' blames lack of refineries. Drivers expected to adapt
The Detroit News
10/05/05
by Alejandro Barbajosa / Bloomberg
(Copyright 2003)
U.S. motorists will pay $4 on average for a gallon of regular gasoline before the end of the year as hurricane-damaged refineries stay shut and imports from Europe wane, said Luis Giusti of the Center for Global Energy Studies.Hurricanes Katrina and Rita idled as much as 29 percent of U.S. refining capacity, cutting gasoline stockpiles to less than 23 days of consumption, close to the all-time low in 2003.Average pump prices reached a record $3.057 a gallon Sept. 2, the week Katrina struck, according to the AAA motorist organization.Pressure on gasoline prices is going to continue because there's no solution in sight to refining, said Giusti, a CGES board member. We're not even feeling it yet because imports from Europe moved immediately after the refineries were closed. That relief will pass.Katrina and Rita marked one of the most disruptive hurricane seasons for the U.S. oil industry, shutting output from the Gulf of Mexico for five days. About 18 percent of the nation's refining capacity remains closed.Katrina prompted the International Energy Agency to coordinate the release of emergency oil and fuel supplies for the first time in 15 years.The average price at the pump for regular gasoline is up 53 percent from a year ago and is close to an inflation-adjusted peak of $3.14 a gallon in 1981.U.S. Energy Secretary Samuel Bodman said the prospect of gasoline supply disruptions following damage to refineries along the Gulf Coast from the hurricanes is propping up pump prices.We're going to need very high gasoline prices because we will be in a critical situation until we manage to replenish supplies, said Francisco Blanch, a senior energy strategist at Merrill Lynch & Co. in London. I don't think demand is softening. U.S. consumers will be able to adapt to higher prices.Not all analysts agree.Peter Beutel, an energy consultant and president of Cameron Hanover Inc. in New Canaan, Conn., last week said the United States will sink into recession by mid-2006 because of fuel prices.We're going to see prices move lower, Beutel said. We've already hit this economy with a huge, huge shock, he said, predicting the economic blow will mean lower gasoline consumption.Demand for gasoline in the four weeks ended Sept. 23 was 2.8 percent below a year earlier.No new refineries have been built in the United States in almost three decades. Strains in refining capacity, exacerbated by hurricane damage, prompted President Bush to urge energy conservation to prevent fuel shortages. Bush on Tuesday said energy supplies are tight and that more refineries are needed.
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Topic: Re: GAS $3.00 plus (Read 7960 times)