As Hurricane Gustav chases workers from offshore oil rigs in the Gulf of Mexico region, others will feel the storm's fury through their pocketbooks as gasoline prices could rise to record heights.
C.I.B.C. World Markets says gasoline at the pumps could reach $1.75 a litre.
Bank economist Jeff Rubin pointed out on Friday that oil and gasoline reserves are much lower than they were when hurricanes disrupted supplies three years ago. Another interruption in production would have much more impact on prices.
"With both crude and total oil product inventories running significantly lower than they were when either Katrina or Rita sidelined Gulf oil production, both oil and gasoline prices are more exposed to potential storm-related supply disruptions than they were three years ago," Rubin wrote in his report. "A comparable hit to production could easily send gasoline prices to new record highs."
Fears that the storm may affect oil production in the Gulf area pushed oil prices above the US$120 a barrel on Friday before they settled back to $116.
"Prices are going to go up pretty soon. You're going to see increases by five, 10, 15 cents a gallon," Tom Kloza, publisher of the Oil Price Information Service, told AP.
"If we have a Katrina-type event, you're talking about gas prices going up another 30 percent."
Whether or not Gustav lives up to its hype as the next Katrina, Rubin says its very presence in the region highlights how vulnerable the US domestic crude supply is.
"The frequency of high grade storms (class 3 to 5 hurricanes) in the region has nearly doubled in recent years. America's one and only source of production growth could be shut down again and the price impacts would be severe."
As of 5 p.m. ET on Friday, Gustav's movement to the northwest was expected to continue, with an entry into the southern Gulf of Mexico forecasted on late Saturday or early Sunday.
With files from the Associated Press
