Gas, Oil Prices Dip As Pipelines Restart
Friday September 2, 8:03 am ET
By Edith Balazs, Associated Press Writer
Gasoline, Oil Prices Slip As Some Gulf Pipelines Restart After Hurricane Katrina
BUDAPEST, Hungary (AP) -- Gasoline futures prices fell Friday for the first time in a week as some fuel pipelines on the U.S. Gulf Coast began to restart operations shut in the wake of Hurricane Katrina.
Japan, meanwhile, said it was considering releasing some of its strategic stockpiles to meet shortages in the United States. And EU security affairs chief Javier Solana said European Union members are making offers to provide oil to the United States from their reserves.
Gasoline futures for delivery on the New York Mercantile Exchange fell more than 7 cents to $2.3350 a gallon in electronic trading by midday in Europe but that is still twice the price from last year.
Retail gasoline prices have soared above $3 a gallon in many parts of the United States in the wake of Katrina and the price spike has triggered thousands of consumer complaints of price gouging.
The October contract for light, sweet crude fell 42 cents to $69.05 a barrel by midday in Europe. In an ominous sign, crude oil contracts for delivery from November thru February -- traditionally high demand months -- were all trading above $70 a barrel.
The International Energy Agency, a Paris-based oil market watchdog under the Organization for Economic Cooperation and Development of the International Energy Agency, was consulting Friday with member countries on tapping their strategic reserves.
"We have ongoing consultations with all member countries, but we need an unanimous agreement to release strategic reserves," IEA spokeswoman Gundi Gadesmann told The Associated Press.
IEA Member countries are holding some 4.1 billion barrels of public and industry oil stocks, of which, roughly 1.4 billion barrels are government controlled for emergency purposes.
In other electronic trading, heating oil was down 6 cents to $2.1389 a gallon.
On London's International Petroleum Exchange, October Brent fell 24 cents to $67.48 a barrel.
Oil prices are some 60 percent higher than a year ago, and that could trim economic growth worldwide if they remain at current levels, Fred Bergsten, director of the Institute for International Economics, a policy research organization in Washington, said Friday.
Bergsten said the three global recessions since World War II were all driven by spikes in oil prices, and although the world economy is currently very strong, the current jump in oil prices looks pretty serious.
"This could certainly dampen growth by a percentage point or two, and if it does, then you're getting pretty close to a global turndown," he told Dow Jones Newswires after giving a speech in Tokyo.
Axel Busch, an analyst at Energyintel based in London, said the temporarily halted flow of crude oil from the Middle East to the U.S. Gulf of Mexico coast may have all but "wiped out" the world's daily excess capacity of around 1.5 million barrels that is used to offset any unplanned production outage.
"The world's crude comfort cushion has in reality disappeared," Busch said.
"With continuing strife and tension in several of the world's oil producing hot spots, including Nigeria, Iraq and elsewhere in the Middle East, it would take only relatively minor supply disruptions, or another hurricane, to tip the market over the edge," he added.
Some fuel pipelines began restarting operations Friday, but the product remains in short supply after Hurricane Katrina shut down nine Gulf Coast refineries, disrupted gasoline pipelines to the Midwest and East and stopped 90 percent of the oil production in the Gulf of Mexico.
The Gulf is responsible for around 30 percent of U.S. crude production and quarter of its gas. A large portion of U.S. oil imports also arrive at Gulf Coast ports.
The U.S. federal Minerals Management Service said the percentage of oil offline in the Gulf of Mexico was around 90 percent of total output while gas around 79 percent of total daily production. Total lost oil output since Aug. 26 was 7.44 million barrels.
Hurricane Katrina damaged or displaced an estimated 58 Gulf of Mexico oil platforms and drilling rigs, according to the American Petroleum Institute. Among those, 30 rigs and platforms have been reported lost. No company breakdown was available, said Tim Sampson, an API spokesman.
President Bush agreed earlier this week to tap the U.S. Strategic Petroleum Reserve. ExxonMobil Corp. has received a 6 million barrel loan from the emergency stockpile, Dow Jones Newswires reported Friday.
Japan's Ministry of Economy, Trade and Industry said it had received a call exploring the option of releasing some oil reserves from the IEA.
Japan has one of the largest petroleum reserves in the world, with 320.7 million barrels as of June 30.
Panic buying and delayed gasoline deliveries sparked shortages at a number of gas stations across the United States, mostly along the East Coast and in Midwest states. Station owners said many of the shortages were temporary.
A newly released Associated Press poll Thursday showed 24 percent of Americans listed soaring fuel prices as their chief concern -- second only to the war in Iraq -- as gas prices jumped by as much as 50 cents overnight in some states. |
