Refinery worries continue after Katrina

As worries began to surface that shrinking gasoline inventories will make rationing necessary within a few weeks, gasoline prices went higher again on Thursday.

The problem, analysts say is not a shortage of crude oil, but a lack of refining capacity to turn the oil into gasoline with so many refineries either completely closed or running at a significantly reduced capacity.

October gasoline contracts traded on the New York Mercantile Exchange gained 3.8 cents on the day to $2.345 per gallon after having peaked at $2.465 per gallon earlier in the day. Worry that heating oil production will take a second place to gasoline production during the crisis led Nymex heating oil futures to gain 4 percent to $2.135 per gallon after peaking earlier in the day at $2.150 per gallon.

The shortage, brought on by Hurricane Katrina, has also caused shipping prices to rise in the wake of the booking of 20 ships by European refiners to send large amounts of gasoline to the United States. In addition, members nations of the International Energy Agency are considering whether to release part of their strategic petroleum stocks to help ease the US shortages.

Meanwhile, worldwide crude oil supplies could see a reduction due to a threatened strike in Nigeria.

October contracts for West Texas Intermediate crude oil gained 53 cents on the day to $69.47 per barrel, while Brent crude October contracts traded on the International Petroleum Exchange added 70 cents to $67.72 per barrel.

Natural gas prices were also up, as Nymex Henry hub contracts gained 2.4 percent to $11.75 per million British thermal units.