Key pipelines, refineries remain crippled as prices surge

09/01/2005

Associated Press
September 1, 2005

Gasoline prices leaped nationwide Wednesday as key refineries and pipelines remained crippled by Katrina, crimping supplies and leading to caps on the amount of fuel delivered to retailers.

Just how bad the situation becomes for motorists, who are facing pump prices in excess of $3 a gallon in a growing number of markets, depends on how quickly electricity can be restored to Gulf Coast pipelines and refineries, analysts said. Flooding may have left some important refinery equipment submerged, and it will be days before a full damage assessment is completed.

Some rays of hope emerged Wednesday. The Colonial Pipeline Co. said it would restore partial service with help from diesel generators that will allow it to begin shipping gasoline, heating oil and jet fuel from Houston to markets up and down the East Coast. A Transportation Department spokesman said the Plantation Pipe Line Co. would restore partial service on its East Coast lines Wednesday night as well.

Similarly, the Louisiana Offshore Oil Port, through which 10 percent of all U.S. oil imports flow, said generators would enable it to gradually resume partial service.

A significant amount of oil and gas production in the Gulf of Mexico remains shut down, and reports of banged-up platforms and missing rigs continued to trickle in as companies conducted aerial inspections of offshore facilities.

Onshore, wholesale gasoline suppliers have begun capping the amount of fuel they sell to retailers in certain markets to make sure retailers do not take delivery of more fuel than they need.

Analysts said that while shortages have been reported in a small number of markets, they do not believe the problem is widespread, and they cautioned motorists not to top off tanks out of fear.