US EIA says retail gasoline prices 'may have peaked'

Washington (Platts)--8Sep2005

US retail gasoline prices may have peaked, or if not, are very close to a
peak following disruptions related to Hurricane Katrina, the US Energy
Information Administration said Thursday. 
     The agency, the statistical arm of the US Energy Department, noted that
Katrina "dealt a devastating blow to the US gasoline market" by curtailing
crude oil production and idling refineries and key pipelines.
     "All of this added up to a dramatic drop in the supply of gasoline at a
time when demand typically peaks, as well as having the distribution system
dramatically affected," EIA said in its This Week in Petroleum report.
     "The result was very high prices for many stations which had gasoline,
particularly along the eastern portion of the country, and some stations that
had no gasoline available temporarily."
     The average price for regular-grade retail gasoline was $3.07/gal on
Monday, EIA noted, a record 46 cts increase from the prior week and just a
nickel shy of the inflation-adjusted record of $3.12/gal in March 1981.
     But indicators show that gasoline prices may be on their way down from
their peaks, EIA said, noting that many Gulf Coast refineries, pipelines and
production facilities have been able to return to service.
     In addition, gasoline imports, which were down during the week ending Sep
2, are expected to pick up over the next couple of weeks, the agency said.
     "It generally takes about two weeks for gasoline imports to arrive from
Europe and other sources and get incorporated into the US gasoline supply
chain," EIA explained. "And with the price jump seen over the last week, there
are reports that gasoline shipments are on their way and should begin arriving
possibly as early as late this week."
     The Paris-based International Energy Agency's announcement last week that
it would make over 30-mil bbl of non-US gasoline, other products and crude
available to the US market should also "aid in adding supply and putting
immediate downward pressure on prices," EIA said.
     The US' sale of 30-mil bbl of crude from the Strategic Petroleum Reserve,
in addition to the 12.6-mil bbl of crude loans to refiners to meet more
immediate concerns, "should also alleviate any concerns refiners might have in
terms of crude oil supply over the next several weeks."
     Nevertheless, it "may be a while before retail prices return to
pre-hurricane levels" because it "appears that four refineries" -- Chevron's
325,000 b/d Pascagoula, Mississippi, plant; ConocoPhillips' 250,000 b/d
Alliance refinery in Belle Chasse, Louisiana; the ExxonMobil-operated 187,000
b/d refinery in Chalmette, Louisiana; and Murphy Oil's 125,000 b/d Meraux,
Louisiana, refinery -- "are likely to be down for an extended period."
     EIA noted that "these refineries help supply the Plantation and Colonial
pipelines and it is unclear how easily and efficiently increased gasoline
imports will be able to be inserted into the distribution system."
     The agency said it expects retail gasoline prices to be lower by the end
of September than they are now, "and they should continue to fall throughout
most of the next couple of months, absent any disruptions to supply from other
hurricane activity or other factors."

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