Saturday - September 13, 2008

Oil Down, Gas Up: Global Economy vs Hurricane Ike

Gasoline prices jumped at the wholesale level Friday as Hurricane Ike swept through Gulf of Mexico, prompting companies along the Texas coast to shut down refining and drilling operations.

Crude oil on the futures market, however, briefly sank below the psychologically important $100-a-barrel mark for the first time since April 2—showing that investors believe a worsening global economy will continue to drive down demand for some time in the United States and elsewhere.

The fact that U.S. fuel demand is so weak right now might mean the recent surge in the wholesale price of gasoline—which rose to about $4.85 a gallon in the Gulf Coast market Friday—might not be passed along to consumers unless Ike’s impact is severe and long-lasting.

“Major oil companies are sensitive to raising prices in this environment,” said Ben Brockwell, director of data pricing and information services at the Oil Price Information Service.

“Hopefully it’s a temporary phenomenon, but we won’t know until next week,” Brockwell said.
...
The average U.S. retail price for gasoline edged up less than a penny to $3.675 Friday from Thursday, according to auto club AAA, OPIS and Wright Express.

On the New York Mercantile Exchange, light, sweet crude for October delivery rose 31 cents to settle at $101.18 a barrel, after briefly sinking to $99.99.

October gasoline futures climbed 2.08 cents to settle at $2.7696 a gallon on Nymex.

“All week long, it’s been a gasoline story more than anything. If you just looked at the crude market independently, you wouldn’t know that we had a couple of hurricanes,” said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, referring to Ike and last week’s Gustav.

“This dichotomy could persist for a few more days next week,” he said. But “once the storm factor subsides, we’ll see a much higher correlation between gasoline and crude oil.”

Gas prices in my part of NJ jumped 10 cents a gallon overnight. I’m hoping this is really really temporary because I’ve only got half a tank right now. Ike is making a big mess in Texas. It looks like as many as 100,000 people did not head the evacuation orders, even though Texas made a huge effort to assist folks who couldn’t evacuate themselves. Now I’m hearing that some of the rescue efforts are being suspended because the risk is too high to the rescue crews. So there are going to be some fatalities. Say a prayer for Texas and her soggy citizens.

The storm flooded Galveton’s historic district with 7 feet of water, which has since subsided to 4 feet, according to Galveston County official Margaret Bunch. A foot of water flooded the city’s main courthouse, where many people rode out the storm, she said.

A fire broke out at a Galveston yacht basin, where boats are stored and fixed, said Galveston Fire Chief Michael Varela Sr., and firefighters were unable to reach it because the area was flooded with about 8 feet of water.

Galveston City Manager Steve LeBlanc said about 40 percent of the city’s 57,523 residents chose to stay despite evacuation orders. “It’s unfortunate that the warnings that we sent out were not heeded,” he said.

Posted by Drew458     on 09/13/2008 at 11:28 AM   
Filed Under: • Climate-Weather • News-Briefs • Oil, Alternative Energy, and Gas Prices •  
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