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Tuesday, September 16, 2008

Ike causes short term pain at the Pump

WASHINGTON — Blame Hurricane Ike for causing more pain at many U.S. gas pumps. On Monday afternoon, President Bush told the media that Hurricane Ike has put "a pinch" on the nation's energy supply. But the effects of the major hurricane, which struck the heart of the nation's refining center this weekend, may be short-lived and not as significant as feared, according to the U.S. Department of Energy.

Average prices for gasoline exceeded $4 per gallon in such states as Georgia, Illinois, Michigan, South Carolina and Tennessee, according to statistics posted Monday morning by AAA's Daily Fuel Gauge Report, the Oil Price Information Service and Wright Express. The current average in California is $3.82. The current national average stands at $3.84, versus $3.76 a month ago and just $2.74 a year ago.

The Gulf Coast region is home to 42 percent of the total U.S. refining capacity. The U.S. Department of Energy said Monday that a total of 591 production platforms or 82.4 percent of the Gulf's 717 manned platforms have been evacuated because of the Category 2 hurricane. Personnel from 92 rigs, representing 76 percent of those operating in the region, have been removed. The Department of Energy said "1,295,223 barrels per day of the Gulf's crude production remains shut in, equivalent to 99.6 percent of the Gulf's crude production.

However, the federal government appears optimistic that the effects from Hurricane Ike will not reach the scope of Hurricane Katrina, which hit the Gulf on August 29, 2005. Refineries in the Gulf were shuttered for six to nine months after that disaster. "Oil refineries suffered minimal damage from Hurricane Ike and are making preparations to restart operations," noted the Department of Energy in its situation report on Monday.

There was more encouraging news from Louisiana's Department of Natural Resources on Monday. "The basic infrastructure of the state's oil and gas industry appears to have weathered the storm with almost no damage," it said in a statement. However, it reports that only 18,621 barrels per day, or 12 percent of the normal Louisiana production, has been restored.

The Associated Press on Sunday reported that Hurricane Ike appeared to have destroyed a number of production platforms in the Gulf and damaged some of the pipelines there. Lars Herbst, regional director for the U.S. Minerals Management Service, told the AP that flyovers showed that at least 10 production platforms were destroyed by the storm. In contrast, Hurricane Katrina destroyed 44 platforms, while 2005's Hurricane Rita destroyed 64.

What this means to you: The fallout from Hurricane Ike is not shaping up to be a major, long-term pain, say the experts