With Hurricane Ike threatening the Gulf of Mexico, all bets are off for the time being about its affect on oil prices, but the Department of Energy (DOE) noted that despite the shut-in of crude oil production and refinery outages as a result of Hurricane Gustav, futures prices continued to be significantly lower compared to the closing prices August 29.
Last week, the average price of diesel dropped a little over six cents, continuing its downward trend since mid-July. Truck drivers were filling tanks at an overall average of $4.059 per gallon while low sulfur diesel was ringing up at an average of $3.936 per gallon and ultra low sulfur diesel at $4.075.
Keeping an eye on the current storm, energy companies were reporting evacuations of off-shore rig workers and efforts to secure on-shore production facilities.
Meanwhile, DOE reported: "Market expectations that shut-in crude oil production and refinery outages are going to be temporary continues to keep prices down, more than compensating for any pre-hurricane price increases. As long as companies continue to report no long-term damage, crude oil prices are not likely to spike significantly higher due to Hurricane Gustav. However, temporary local product supply problems could occur before all refinery production and pipeline flows return to normal, which could result in increased retail prices in some areas."
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