Gasoline and natural gas futures prices hit new highs as Hurricane Katrina walloped the key Gulf Coast region Monday, but the storm didn't appear to deliver the catastrophic blow that many feared, leaving oil futures higher but short of the historic $70-a-barrel mark.
Most of the energy facilities in Louisiana, Mississippi and Alabama were shut down as Katrina roared through the region, which accounts for about one-third of the 5.5 million barrels of oil that the United States produces each day and more than 20% of its daily natural gas output.
For The Record
Los Angeles Times Thursday September 01, 2005 Home Edition Main News Part A Page 2 National Desk 1 inches; 42 words Type of Material: Correction
Hurricane maps -- A map of the Gulf Coast with coverage of Hurricane Katrina in Tuesday's Section A labeled part of Interstate 10 as Interstate 12. Another map showing the storm's projected path mistakenly showed an island in the Gulf of Mexico.
If repairs to damaged Gulf oil platforms, refineries and pipelines take weeks or months, shortages of oil, gasoline and natural gas could develop, sending prices of those commodities even higher and threatening the U.S. economy, analysts said. But it will take time to gauge the full extent of the hurricane's damage, adding uncertainty to the energy markets at a time when oil suppliers struggle to keep pace with rising demand.
"We're in an information vacuum because it's going to be another couple of days until we get a meaningful damage assessment," said David Pursell, a principal at Pickering Energy Partners Inc. in Houston.
The industry's trade group, the American Petroleum Institute, urged consumers to "use energy wisely" in the meantime.
Analysts noted that the region was slow to recover from last year's Hurricane Ivan, in part because damage to underwater pipelines wasn't immediately apparent or easy to fix.
Pipeline damage "is generally more difficult and costly to repair," analyst Doug Leggate of Citigroup Global Markets Inc. said in a note to clients.
The U.S. benchmark grade of crude oil for October delivery shot as high as $70.80 a barrel in overnight electronic trading before closing at $67.20, up $1.07 for the day on the New York Mercantile Exchange. That fell short of the Nymex record close of $67.49 a barrel set Thursday. Adjusted for inflation, oil peaked at more than $90 a barrel in early 1981.
But natural gas and gasoline futures set Nymex records Monday.
Natural gas for September delivery jumped $1.055 to $10.847 per million British thermal units as the winter heating season looms. Natural gas also is used to generate nearly half of California's electricity.
Gasoline futures for September delivery soared 13 cents to $2.061 a gallon. The rally probably means motorists will see pump prices climb even higher.
