Ike's spike in gas prices may last several weeks

Gasoline prices spiked for a third straight day Monday even as power was restored to a number of massive refineries along the Gulf Coast.

Industry officials said it may be several weeks before the nation's refining capacity is restored.

At least 14 Texas refineries closed before Hurricane Ike made landfall, removing more than 20 percent of the nation's petroleum refining capacity. The storm destroyed at least a dozen production platforms and drilling rigs in the Gulf of Mexico, and production is still shut down in the critical region.

Red Cavaney, president of the American Petroleum Institute, which represents the major oil companies, said refineries appeared to have escaped a repeat of the widespread damage three years ago.

“We've not seen anywhere near the water damage as we saw in 2005,” according to Cavaney, who said refinery operation could resume in a matter of several weeks, not months as was the case after hurricanes Katrina and Rita.

Valero Energy Corp., North America's largest refiner, said it had regained limited power at two of three shuttered facilities — in Houston and Texas City — while its plant in Port Arthur remained dark.

Exxon Mobil Corp. said Monday electricity had been restored at its refinery in Bay City, east of Houston, and it was preparing to resume operations. That refinery is the nation's largest. But the pipes that bring crude into the refineries and those that carry finished products like gasoline away must also have power, and there were shortages all over the south and Midwest on Monday.

That has created problems for gas stations from the Gulf Coast to the Northeast.

Overnight, retail gasoline prices nationwide rose an average of about a nickel for a gallon of regular gasoline, to $3.842, according to auto club AAA, the Oil Price Information Service and Wright Express.

Yet in some regions, particularly in the South, gas prices soared past $5.

Analysts said high-priced gasoline could be around for several weeks.

“We're looking at close to $4 a gallon for the rest of September,” Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service. “People are going to observe more of this disconnect where retail prices move higher even though crude oil is trading below $100 a barrel.”

Oil prices fell $5.47 and closed below $100 a barrel for the first time in six months Monday on the New York Mercantile Exchange. Crude has fallen about $50 from its all-time trading record above $147 in July as the global economy increasingly appears headed for a hard landing.

But that hasn't stopped the spike in spot gasoline prices caused by disruptions from the Gulf.

Plantation Pipe Line Co., which transports refined petroleum products to the southeastern United States, said it was delivering about 60 percent of its typical volumes because of limited refinery supply in Louisiana following Gustav. Ike limited supply even further.

Power outages along the Gulf Coast continue to slow the restart of refineries. Utilities reported nearly 4 million customers without power.