Despite worries that Hurricane Gustav would wreak havoc to Gulf of Mexico refineries and oil supplies, the price of crude oil actually dropped from $115.46 per barrel on August 29th to $109.71 yesterday, and is selling for $108.29 a barrel today, CNNMoney.com reported.
According to the U.S. Minerals Management Service (MMS), 100% of the federal portion of the Gulf of Mexicoâ€™s crude oil production was shut-in as of 12:30 pm EDT yesterday, and 13 refineries in the Gulf regionâ€”representing more than 2.5 million barrels per day--were shut down while 10 other refineries reduced output. MMS said that shutdown refineries can take a week or more to return to normal operations.
The U.S. Department of Energy also reported that the Capline and LoCap crude oil pipelines, the Centennial product pipeline, and the Louisiana Offshore Oil Port have been temporarily shut down, while the Colonial and Plantation product pipelines are running at reduced rates.
Yet despite the shutdowns, crude oil futures prices on the New York Mercantile Exchange (NYMEX) still fell $5.75 per barrel. â€śMarket expectations that shut-in crude oil production and refinery outages were going to be temporary is pushing prices down, removing any pre-hurricane price increases,â€ť the Energy Information Administration (EIA) said. â€śAs long as companies report no long-term damage, crude oil prices are not likely to spike significantly higher due to Hurricane Gustav.â€ť
Diesel prices also fell from an average of $4.15 per gallon on August 25 to $4.12 on September 1, EIA said. While prices are still more than 40% higher than they were one year ago, they have fallen 65 cents in six weeks since the July 14th record of $4.76.
The storm has had no tangible effect on local fuel prices, as prices in the Gulf Coast region dropped three cents from August 25 to September 1, and the $4.07 average price ties the region with the Midwest for the least expensive area in the U.S. The most expensive diesel prices are in New England, where a gallon averages $4.36.
In response to possible disaster conditions, the Federal Motor Carrier Safety Administration (FMCSA) announced that it would temporarily suspend hours-of-service and other safety regulations to motor carriers and drivers providing supplies and services to, from or within emergency areas. The declaration expires on September 26th in Louisiana and Texas, September 28th in Alabama and September 30th in Mississippi, FMCSA said.
Gustav has, however, led to some road closures, although most of the damage was done to local roads. The most major current restriction is on Interstate 10 in Louisiana between Slidell and New Orleans, which is closed to combination loads above 70,000 lbs. and single vehicles above 40,000 lbs.
Further information regarding road closures is available at the following sites:
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