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Oil and Gas Prices Fall Slightly

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Oil and Gas Prices Fall Slightly


Oil and Gas Prices Fall Slightly

Oil and Gas Prices Fall Slightly

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  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript

Oil and gas prices ease a bit as it appears the worst of the supply shortages caused by Katrina may be over. Some Gulf refineries are reopening, and emergency energy stockpiles are being released to the market.


Gasoline prices are beginning to fall slightly, and repairs to refineries and pipelines are beginning to show progress. Other repairs will take months. NPR's Scott Horsley reports.

SCOTT HORSLEY reporting:

The Marathon refinery in Garyville, Louisiana, is making gasoline again. It's the first of eight refineries shut down by the hurricane to come back on line. Returning employees found the plant essentially undamaged by the storm and restarted it over the weekend. Spokeswoman Angelia Graves says the plant's now running at full speed, making millions of gallons of gas each day.

Ms. ANGELIA GRAVES (Spokeswoman, Marathon Oil): We're very pleased to be able to bring that additional supply to the market to help meet our customers' demands.

HORSLEY: Marathon's also been able to ramp up production at its midwestern refineries now that a key pipeline is operating and they're no longer choked for crude oil. Rayola Dougher, of the American Petroleum Institute, says, from Louisiana to Illinois, refiners are in better shape than they were a week ago.

Ms. RAYOLA DOUGHER (American Petroleum Institute): It's been a massive dislocation, you know, a big jigsaw puzzle that came undone, and they're putting the pieces back together right now.

HORSLEY: The improving supply situation is starting to show up in prices at the gas pump. According to the Energy Department, the average price of gasoline soared to almost $3.07 a gallon on Monday, within a dime of the inflation-adjusted record. But a survey released by AAA yesterday showed gas prices inching back by a penny a gallon, and gas prices fell sharply on the futures market, suggesting further cuts are possible.

Ben Brockwell tracks energy for the Oil Price Information Service.

Mr. BEN BROCKWELL (Oil Price Information Service): The good news is the refineries in the Gulf Coast that can resume production are doing so. However, it's premature to say the oil patch is out of the woods yet.

HORSLEY: That's because the repairs made so far are the easiest. Former refinery worker Tancred Lidderdale, who's now with the Energy Department, says fixing flooded refineries will pose a bigger challenge.

Mr. TANCRED LIDDERDALE (Energy Department): Just like if your car went--was underwater, your electrical system is pretty much shot. They're going to have damage to their electrical pumps or all their electrical equipment valves. That takes some time to be repaired. So that can take a couple of months.

HORSLEY: At the Murphy Oil refinery in Meraux, Louisiana, officials say it could take another three weeks just to assess the damage, a job that's taking longer because the plant is still surrounded by water. Murphy has better news about its two deep-water drilling platforms in the Gulf. Company treasurer Kevin Fitzgerald says one platform is already up and running again.

Mr. KEVIN FITZGERALD (Treasurer, Murphy Oil Corporation): The other platform, that was more in the eye of the storm, is still being assessed, still needs some repairs, but it appears to be relatively minimal. `Relatively minimal' in offshore terms can still be a couple of weeks.

HORSLEY: According to the Energy Department, more than 40 percent of Gulf oil production is now back on line, up from just 5 percent at the beginning of last week. Every day, more oil is being produced. But the Petroleum Institute's Dougher says it could be a long time before the region's output is back to normal.

Ms. DOUGHER: There are 26,000 miles of underground pipelines in the Gulf of Mexico. We are still even recovering now from Ivan a year ago, so it's hard to say when it's going to be back to where it was.

HORSLEY: The big impact from Katrina at the gas pump may have peaked, but the storm will have lingering effects on the nation's oil and gasoline supply, and consumers will continue to pay a price for that.

Scott Horsley, NPR News.

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