Gas Inches Up, Oil Down as Production and Refineries Shut Down in the Gulf

Justin Sullivan/Getty Images(WASHINGTON) -- The average price of a gallon of regular gas is $3.78, up three cents from a week ago, according to the Department of Energy.  This price is also up 15 cents from a year ago.
 
Seventy-eight percent of the oil production in the Gulf of Mexico has been halted in preparation for Tropical Storm Isaac. The Bureau of Safety and Environmental Enforcement reports about one million barrels per day of oil production has been stopped as 346 offshore oil and gas production platforms have been evacuated.  That's 17 percent of daily U.S. oil production and six percent of consumption.
 
Also according to the Department of Energy, six refineries in the path of the storm reported that they are shut down or were in the process of shutting down.  The shutdowns so far represent 1,316,500 barrels a day worth of petroleum production -- this accounts for about eight percent of total U.S. refinery capacity (as in how much gas and diesel refineries can produce).
 
In a somewhat odd development, oil prices ended the day lower. Oil closed at $95.47, down 68 cents for the day.
 
Some analysts think this drop is in anticipation of a Strategic Petroleum Oil Reserve release if there is a major supply disruption after Isaac.
 
A possible bottleneck in refining capacity could also be causing the drop in oil prices.  Demand for oil goes down if fewer refineries are available to turn oil into gasoline.

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