Hurricane Katrina is going to slam American consumers who do not live anywhere near the eye of the storm, in the form of higher prices for gas and heating oil, analysts predicted Monday.
Crude oil surged to a record above $70 a barrel in New York after the hurricane forced oil companies to evacuate platforms in the Gulf of Mexico, where more than a quarter of U.S. oil is produced. Prices then slipped back after hitting the high.
Oil prices jumped on worries that the hurricane would disrupt the already delicate balance between oil supply and demand in the United States.
Natural gas, heating oil and gasoline climbed to all-time highs as well.
White House spokesman Scott McClellan told reporters traveling with President Bush to Arizona today that the administration is considering releasing some oil from the Strategic Petroleum Reserve to help ease the shortfall of supplies caused by the hurricane. No decision has yet been made, he said.
Secretary of Energy Samuel W. Bodman released a statement saying the department was "mindful that the affected region contributes a significant amount of our oil, gas, and refined product supply."
Bodman said the Petroleum Reserve "can be used to lend petroleum to refineries if they experience shortages and are therefore unable to maintain their production. Should circumstances warrant, the President also can direct that petroleum be withdrawn from the SPR and sold.
"Over the next few days, we will continue to gain more information on the specific needs and then be able to make a better determination on how we can help," the statement said.
Last year, the government released more than 5 million barrels from the reserve following supply disruptions after Hurricane Ivan. Ivan, which struck roughly the same region, hit production for a long time, analysts noted. The emergency stockpile includes more than 700 million barrels of crude oil stored underground in Louisiana and Texas.
Almost 50 percent of the daily average output from the Gulf Coast was halted Sunday because of Katrina as oil companies evacuated workers and shut down more than 600,000 barrels of daily production in the area.
Analysts predicted there would be short-term spikes in gas prices because of worries that one or two major refineries could be down for an extended period. The U.S. produces 5.3 million barrels of crude oil a day.
Gasoline for September delivery surged 12 percent, to $2.15 a gallon in New York. Prices are 83 percent higher than a year ago.
Heating oil for September delivery jumped 7.3 percent to $1.97 a gallon. Heating oil is 72 percent higher than a year ago.