After Katrina, demand for gas shifts to low gear

After spree of panic buying, sales appear to drop 4 percent

September 09, 2005|By James F. Peltz and Claire Hoffman | James F. Peltz and Claire Hoffman,LOS ANGELES TIMES

Drivers' demand for gasoline appears to have downshifted since Hurricane Katrina sent pump prices soaring above $3 a gallon across much of the nation.

Katrina initially sparked panic buying, sporadic shortages and televised images of long lines at some service stations. Then, consumers pulled back as prices hit record highs, analysts said yesterday.

"America topped its tanks, and then the knee-jerk reaction was: `I'm not going to pay $3.19 a gallon for gas,'" said Tom Kloza, chief analyst at Oil Price Information Service, an energy research firm.

Demand was likely to taper off anyway, because the Labor Day weekend marks the unofficial end of the busy summer driving season. In addition, gas prices already were at or near record levels even before Katrina hit Aug. 29.

But in the aftermath of Katrina, at least one gasoline seller reported a 15 percent drop in sales over Labor Day weekend compared with a year earlier, Kloza said.

The Energy Department issues weekly reports on gasoline demand and supplies, and many analysts expected its report yesterday to show a surge in demand during the four days after Katrina's devastation, reflecting the panic buying.

Yet the agency's statistics arm, the Energy Information Administration, reported that in the week that ended Sept. 2, gasoline demand fell 4 percent from the prior week, to 9.03 million barrels a day.

Analysts promptly labeled the data as suspect, contending that reliable numbers were hard to obtain in the days immediately after Katrina made landfall.

With about 20 percent of U.S. refining capacity either shut down or operating at reduced levels last week, compiling precise data was difficult and "we question the accuracy of these numbers," analyst Jacques Rousseau of the investment firm Friedman Billings Ramsey & Co. said in a report to clients.

Meanwhile, prices of gasoline and crude oil futures edged higher in commodities trading yesterday after falling for several days.

The U.S. benchmark light sweet crude grade of oil for October delivery rose 12 cents to $64.49 a barrel, and gasoline for October delivery inched up 1.33 cents to $2.036 a gallon.

The upswing came after the government reported no daily progress on the Gulf Coast's overall effort to rebuild its damaged energy facilities, a stark reminder that the recovery is expected to take months and require enormous investment.

About 60 percent of the region's oil production remained shut down, up from 57 percent on Wednesday, according to the U.S. Minerals Management Service.

The average price of self-serve regular nationwide slipped to $3.03 a gallon from $3.042 on Wednesday, according to AAA.

The Los Angeles Times is a Tribune Publishing newspaper.

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