Wholesale gasoline prices on the Gulf Coast broke $3 a gallon on Tuesday- ar higher than prices at most U.S. pumps -- as major refineries remained shut after Hurricane Katrina, trading sources said.
This could spell a huge spike in retail prices for drivers throughout the United States in the coming days and in particular those in the Southeast, where prices are typically the lowest in the country.
The spike in wholesale prices from below $2 last Friday came after Hurricane Katrina plowed through the Gulf of Mexico and made landfall near New Orleans, forcing shut at least eight refineries in Louisiana and Mississippi and slowing production from two others.
The shut refineries and plants with reduced production account for about 15 percent of U.S. refinery production.
On Tuesday, a gallon of gasoline traded in the Houston-based Gulf Coast physical marketing hub cost about $3.15 a gallon -- sharply higher than the national average retail price of about $2.60 a gallon.
Traders were reluctant to guess how high the wholesale spike will make prices at the pump but some say it's safe to bet that the price of a gallon of regular self-service gasoline in the United States will top $3 per gallon by next week.
"Retail prices are going to vary among regions but for all practical purposes $3 is a floor," said private oil analyst Jim Ritterbusch.
The spike could spread across other regions of the United States due to the shutdown of two fuel pipelines from the Gulf Coast to the Northeast, including the massive Colonial Pipeline.
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