Gas prices may rise by ten cents a litre in wake of Gulf Coast hurricane

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The retail price of petrol sold in Finland may rise by more than ten cents per litre within the next few days if world wholesale prices stay at their present levels.
      "The latest world market price figures promise an 11-cent mark-up in the pump price in Finland", estimates Matti Peitso, the head of Neste Marketing. Managing Director Mika Anttonen, from North European Oil Trade, predicts an increase by 8-10 cents per litre in the coming days.
      It is estimated it will take weeks before refineries put out of action by Hurricane Katrina can be brought back onstream.
      Katrina managed to reduce US crude oil refining capacity by 1.8 million barrels per day, which translates to around 9% of the country's daily consumption of gasoline, the end product of the refining process.
     
The world market immediately reacted to the impending gasoline shortage. Futures of gasoline, sold at wholesale prices, surged on the New York Stock Exchange so quickly that trading was momentarily suspended in order to let the market settle.
      On Wednesday, the gasoline wholesale price on the New York Stock Exchange hit $2.65 per gallon. Last Friday the price of gas was below two dollars.
      The gasoline world market price follows the developments at the NYSE. The world market price, in turn, dictates the retail price, or the so-called pump price, even in Finland.
      "Never before has there been this sort of urgency for such a drastic price increase in one go", says Peitso, whose career in the petrol business spans more than a quarter of a century.
      Mika Anttonen is slightly more cautious than Peitso in his predictions. On Wednesday afternoon, Anttonen offered an estimate based on the wholesale figures he had seen, according to which the pump price in Finland would increase by 8-10 cents per litre in the next days and weeks.
     
According to the polttoaine.net Internet site, which specialises in monitoring the development of gasoline prices, the average Finnish price for unleaded 95-octane gasoline was EUR 1.276 per litre on Tuesday.
      A ten-cent increase would take the price close to the EUR 1.40 mark, and in places beyond it. Gasoline prices are already at a record high in this country, and some anticipate that a pump price in excess of EUR 1.40 a litre would start to bite into consumption. It would also spell serious problems for homeowners relying on oil-fired central heating, as naturally prices of other refinery blends would rise at the same pace.
     
Elsewhere in the world, the price of fuel has also skyrocketed. In the United States, the gasoline pump price averages currently around $2.60 per gallon, which translates to EUR 0.55 per litre, equalling the wholesale price in the wake of Hurricane Katrina.
      Market experts disagree on whether the pump price of gas per gallon might reach the three-dollar mark.
      In order to keep the market in check, the American government announced on Tuesday that it would start selling oil from its Strategic Petroleum Reserve storages. This, however, may prove a somewhat futile effort with little effect on the gasoline street price, as the problem at present lies above all in the paralysed refining industry.


Previously in HS International Edition:
  Fuel prices hit record highs (16.8.2005)

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