KATRINA'S IMPACT

Experts: $4 a gallon gas coming soon
Pricing analysts say consumers can expect even higher prices at the pump.
August 31, 2005: 11:18 AM EDT
By Grace Wong, CNN/Money staff writer


$4 gasoline coming

NEW YORK (CNN/Money) - Consumers can expect retail gas prices to rise to $4 a gallon soon but whether they stay there depends on the long-term damage to oil facilities from Hurricane Katrina, oil and gas analysts said Wednesday.

"There's no question gas will hit $4 a gallon," Ben Brockwell, director of pricing at the Oil Price Information Service, said. "The question is how high will it go and how long will it last?"

OPIS tracks wholesale and retail oil prices and provides pricing information for AAA's daily reports on fuel prices.

Brockwell said with gasoline prices now exceeding $3 a gallon before even reaching the wholesale level, it "doesn't take a genius" to expect retail prices to hit $4 a gallon soon.

"Consumers haven't seen the worst of it yet," Brockwell said.

He expects consumers in the Southeast and Northeast to be pinched first, following the impact of Hurricane Katrina on the Gulf Coast region.

Katrina forced operators to close more than a tenth of the country's refining capacity and a quarter of its oil production, which sent gasoline prices surging.

"With this kind of hiccup in refinery capacity, in stretched markets like California, you could see over $4 a gallon in gas," Evan Smith, an analyst at U.S. Global Investors, told CNN/Money.

While it's still too early to fully assess the damage caused by Katrina, efforts to build up inventories of crude oil, natural gas and other products like gasoline will be set back by the storm, according to Nariman Behravesh, chief economist at Global Insight.

In a research note, Behravesh laid out a worst-case scenario that puts average prices for regular unleaded gasoline at about $3.50 a gallon for the next four to six months.

"The impact on consumer spending in such a scenario would be very dramatic, cutting the growth rate by as much as 3 percent and pushing real GDP growth in the fourth quarter closer to zero," he wrote.

In a best-case scenario, he forecast retail pump prices to peak at $3 a gallon for a couple of months, but then fall back to around $2.50 by year-end.

The nationwide average price for a gallon of regular unleaded hit a fresh high of $2.619 Wednesday, according to AAA, the largest U.S. motorist organization, formerly known as the American Automobile Association.

Average gasoline prices have gained 40 percent in the last year.

Prices for crude oil are also up sharply and are currently hovering near record highs just under $70 a barrel.




VOTE HOT!!!! SO GAS PASSERS LIKE ME WON'T ANNOY YOU!!!

whoever smealt it dealt it!!!!

My advice is to go buy gas tonight before the prices go up in a couple of days even if you only have half a tank it's worth it.

VOTE HOT!!!! SO GAS PASSERS LIKE ME WON'T ANNOY YOU!!!

whoever smealt it dealt it!!!!

Our president has his and his daddy's greedy little paws in private oil, didnt ANYONE see Farenheight 9/11!!??? HE should be the one to get off his took-ASS and do SOMETHING for us,, instead of answering a question with a non sensical mumble and playing cowboy down in Texas
(sorry...pissed off at all this crap...)

:'}

Wow. Blaming President Bush for hurricane-induced damage to our nation's oil and gas infrastructure. Congratulations on sinking to a new low.

LOL. New Low. That's funny. I guess the increase in gas prices before the hurricane just happen on it's on. Yeah RIGHT!!!!!!!!!!!!!!!!!!!!!