Supply Concerns Push Gas Prices to $3 per Gallon on Labor Day
September 7, 2005
The average price for regular unleaded gasoline hit a new high of $3.057 on Labor Day, according to the American Automobile Association (AAA). Diesel fuel prices also hit a record high of $2.96 per gallon. Supply concerns due to the impacts of Hurricane Katrina on the Gulf Coast have driven both wholesale and retail gasoline prices higher. However, DOE is concerned about potential gas gouging, and has set up a Web site and toll-free number (1-800-244-3301) for people to file complaints about unfair gas prices. See the AAA's "Fuel Gage Report" and DOE's "Gas Price Watch Reporting Form" and related press release.
To address the disruption in both oil supply and refining, DOE has made several loans of oil to refiners from the Strategic Petroleum Reserve (SPR) and on September 6th began drawing down the reserve at a rate of 1 million barrels per day and selling the oil on the open market. DOE had just finished filling the SPR to 700 million barrels in August; President Bush authorized drawing down the SPR on September 2nd after finding that Hurricane Katrina has caused a "severe energy supply interruption." The International Energy Agency is also providing 1 million barrels per day of oil and gasoline to the United States, with an emphasis on gasoline, which will help to address refinery shortages. See the DOE press releases from September 1st through the 3rd.
The DOE Office of Electricity Delivery and Energy Reliability (OE) has been issuing daily situation reports on the energy supply situation following Hurricane Katrina. According to the September 6th report, the situation is improving, as only about 70 percent of the oil production and 54 percent of the natural gas production in the Gulf of Mexico remains out of service. A critical oil receiving facility, the Louisiana Offshore Oil Port, is now operating near full capacity, and power has been restored to several important pipelines that are now operating near full capacity. Ten refineries remain shutdown but four claim to be restarting, three of which should be operating by September 12th. The electricity situation is also improving, as less than 972,000 customers in Louisiana and Mississippi remain without power, down from a peak of 1.7 million. According to DOE's Energy Information Administration (EIA), the improving situation and the SPR releases caused futures and spot prices for oil, gasoline, and natural gas to decline on September 2nd. See the OE's Hurricane Katrina situation report (PDF 88 KB) and the EIA special report on Hurricane Katrina. Download Adobe Reader.