Hurricane Gustav is threatening Gas prices ??

As America hits the road over the long Labor Day weekend, Hurricane Gustav is threatening to wreak havoc at the gas pump.


Gasoline prices have been falling nationwide for weeks, bringing drivers needed relief from this summer's record highs. But now Gustav has taken aim at the Gulf Coast, threatening to tear through the region's gasoline refineries and offshore oil platforms. More than one-quarter of all the oil produced in the United States comes from the gulf.
Forecasts show Gustav taking a path uncomfortably close to Hurricane Katrina's, which smashed into New Orleans three years ago and sent gasoline prices soaring throughout the country.
"It could be a big threat," said John Kingston, who directs oil coverage for the Platts energy information service.
If Gustav damages the gulf's network of oil wells, pipelines and refineries, the country could face another severe gas price spike. If Gustav veers from its expected course - a strong possibility with notoriously unpredictable hurricanes - prices will likely continue their slow slide.
"Even though the track has been pretty consistent, you just don't know," Kingston said. "Two hundred miles off isn't much for a hurricane."
California's gas prices are still falling, although the pace slowed this week. The state's average for a gallon of regular, which peaked in June at $4.61, dropped to $3.92 on Friday, according to the AAA auto club. In San Francisco, drivers pay an average of $4.10, in San Jose, $4.
The nationwide average ticked up by a penny Friday to hit $3.67, after falling steadily for weeks. But analysts blame that small increase on the holiday, not the hurricane.
"I'm not sure that's a huge worry or a signal that something's changing in the market," said Michael Geeser, spokesman for AAA of Northern California. "We usually do see a bump right before a holiday weekend."
Gasoline prices this year have followed the rise and fall of crude oil prices, which shot to record highs above $145 per barrel before tumbling. Oil sold on the New York Mercantile Exchange rose earlier this week as traders cast a nervous eye on Gustav, but by Friday, most of those fears had been factored into the price. Crude fell 13 cents on Friday to close at $115.46.
"The formation of Gustav has really put a stop to the drop in crude oil," said Denton Cinquegrana, who tracks West Coast gasoline markets for the Oil Price Information Service. "If we didn't have this storm, we could be talking about crude oil dropping below $110."
The hurricane's full effect on oil prices won't become clear until early next week. Friday's forecast from the National Weather Service showed the storm possibly making landfall west of New Orleans either late Monday or early Tuesday.
By Friday, most of the oil companies that operate in the gulf were evacuating employees from rigs and ships in the Gulf of Mexico, shuttling them to shore via helicopter. San Ramon's Chevron Corp., which has 3,000 employees in the gulf, reported Friday that it had shut some of its offshore oil fields because pipelines carrying crude from those fields had been closed.
"We don't like to say it's routine, but we've been through it many times," said Chevron spokesman Mickey Driver.
If Gustav misses the oil fields, gasoline prices may continue drifting downward, especially because prices typically drop in autumn. But they probably won't fall as low as they were a year ago, when California's average for regular gas was $2.80.
"We generally pay the lowest we pay for gas all year in the next few months, so barring a hurricane, drivers can probably look forward to that," Geeser said. "But remember, the trend of the last few years is prices never go down as far as they went up."

D. Baker