Gas Price 'Super-Spike' Ahead?

Post-Katrina, May See Tightest Supplies 'Since Iranian Revolution'

(CBS)  Hurricane Katrina could dig into the wallets of drivers all across the nation.

The storm forced the shutdown of production at many oil refineries, fueling a leap in crude oil prices to more than $70 a barrel Monday. That could certainly translate to higher prices at the pump, according to Tom Kloza, an analyst with the Oil Price Information Service.

He told The Early Show co-anchor Julie Chen Tuesday we're going to see "almost an immediate spike or even a super-spike in prices, whether you live in Peoria or on the East Coast or in the Southeast.

"Yesterday, we saw the spot prices, which are the prices the large companies pay, go up by 50 cents a gallon, and nearly that much at the Gulf coast. They went up a little bit less elsewhere. But we saw a big, huge jump in wholesale prices, and retailers are going to have to pass that along, probably in the next ten days or so."

Some observers are calling Katrina the "perfect storm" for gas prices.

Kloza says that Katrina hit at the worst possible time.

"If you looked at how much gasoline people use in a day, and how many days' supply we had," he says, "we only had a little bit over a 20-day supply. This hurricane knocked out about 2 million barrels a day of refining production, which was shut down on a precautionary basis.

"They're not gonna be able to bring back a lot of those refineries in days. They're flooded. They don't have power. They've got very, very dire circumstances to get them restarted to make fuel. So, pretty much everywhere in the country, we're gonna be facing, probably, the tightest fuel stocks we've seen since the Iranian revolution."

Kloza adds, "The Gulf coast is more or less the internal organs that supply the blood flow for the rest of the country. Right now, it's not clear if we've damaged or even lost a couple of those internal organs. But they've been shut down for a while, and my suspicion is that it'll be weeks, as opposed to days, before some of that production comes back on.

"And even when run at full, blown-out rates, we have barely enough supply to keep up with demand during the driving season and, after driving season, gasoline demand doesn't drop by quite as much as some people think. It's going to be touch and go for the next month."

Kloza says the forecast is gloomy for home heating prices, as well.

"Natural gas prices went up 20 percent yesterday," he says. "Heating oil prices at retail will probably be between $2.50 and $2.75 a gallon, compared to a buck and a quarter earlier this decade. That's gonna be pretty painful if you live in the northern climates."