The wholesale price of gasoline jumped more than 41 cents a gallon today as the latest government report showed Hurricane Katrina pretty much put the Gulf Coast petroleum industry out of business.
Stock prices fell in response as traders worried that $3 a gallon gasoline will erode consumer spending and corporate profits -- perhaps even trigger a recession.
The Interior Department's Minerals Management Service reported 95 percent of the crude oil production and 88 percent of offshore natural gas output has been "shut in" by the hurricane.
Onshore refineries that process Gulf Coast crude into gasoline, heating oil and diesel fuel remained shut down. Oil workers still can't get to them to check the damage.
The Louisiana port where boats servicing oil rigs are docked remained cut off by flooding, and the offshore oil port where tankers unload imported fuels was also out of operation. Several giant floating rigs were reported missing -- adrift or sunk.
Crude oil prices jumped $2.61 a barrel, closing at a record $69.81 at the New York Mercantile Exchange, which trades futures contracts for oil to be delivered next month.
Gasoline futures -- also for late September delivery -- jumped 41.39 cents a gallon to a record $2.47 a gallon. That wholesale price does not include taxes, the cost of shipping the fuel to local filling stations or profits for players in the distribution chain.
Following a 13-cent-a-gallon jump in gasoline prices on Monday, today's spike brought predictions that $3 a gallon will soon become not the price of premium in high cost places like Washington, but the cost of regular everywhere in the country.
Shares of McDonald's and Wal-Mart dropped based on worries that costly fuel will crimp family budgets, prompting cutbacks in spending on other things.
The Dow Jones industrial average traded off as much as 100 points during the day but rallied late in the session to close down 50 points at 10,412.82.
The Nasdaq Stock Market fell eight points to 2,129.76. The Standard & Poor's 500 stock index slipped four points to 1,208.41.