Along with that, U.S. refineries have only been able to meet approximately 88 percent of the country's refined oil demand. And that was before the spate of hurricanes hit the Gulf of Mexico.
When Katrina hit late in August, she sank or severely damaged at least 58 production platforms and drilling rigs. In mid-September, it was estimated that 34 percent of the Gulf's natural gas was shut in. With the lost production, EIA estimates of $11.05 per 1,000 cubic ft for natural gas were not too far off the mark.
Heating oil posed a problem, too. About 47 percent of the nation's oil is refined in the states surrounding the Gulf. Unfortunately, four refineries with the combined capacity of 880,000 barrels of oil per day were so damaged, experts were not sure how long it would take to get them back online. Home oil heating prices were expected to reach an estimated $2.46 a gallon in 2005 as compared to $1.80 in 2004.
There were other heating fuel problems in 2005 that look to cause a ripple effect in 2006. Price hedging, pre-paying for stored fuel at a certain price, was delayed because of unstable fuel prices.
Publication date: 12/26/2005