In the last week or two gas prices have come down, but they’re going to go right back up again. The other day I wrote about the problem of heavy crude, and why gas prices have been high: it’s not because OPEC’s being ridiculous, it’s because the US lacks the refinement capacity to meet its own demand, and on top of that, it cannot process the heavy crude being sold by OPEC.
This problem has been exacerbated by Hurricane Rita, whose approach has caused 92% decrease in Gulf Coast refinement capacity. This is 27.5% of the US’s total refining capacity, which is going to aggravate the gasoline shortage even more. After Katrina knocked out some of Louisiana’s capacity (~900,000 barrels/day), Rita will at least temporarily cut out another 4.7 million barrels per day that the US can produce.
Natural gas will be affected as well, with 66% of the Gulf Coast natural gas plants being offline.