State, U.S. Gasoline Prices Fall; Futures Rise on Fears of Storm

California and national retail gasoline prices continued their decline Monday from post-hurricane records, but the threat of a new tropical storm moving toward the Gulf of Mexico was enough to send energy futures higher out of concern that repairs might be slowed to oil and natural gas production operations.

The state’s average price for a gallon of self-serve regular gasoline fell 6.2 cents to $2.902 and the U.S. average plunged 12.3 cents to $2.725, according to the weekly pricing survey by the Energy Information Administration, the Energy Department’s statistics arm.

The California average was up 50 cents from a year ago, but is down from the record $3.056 a gallon reached Sept. 5, after Hurricane Katrina shut down Gulf Coast energy production and refining.

The U.S. average was 69 cents higher than it was a year ago but was down from the peak of $3.117 a gallon, also set Sept. 5. The average diesel price, which set records during the previous two weeks, eased 3 cents in California to $3.21 a gallon and 0.2 cent nationwide to $3.148 a gallon.

Fuel prices have retreated as energy facilities have returned to service in the wake of hurricanes Katrina and Rita, but further pump-price declines could be limited by the fears of another storm.

Wilma, the 21st weather system powerful enough to earn a name this hurricane season, was projected to enter the Gulf of Mexico by Friday night or Saturday morning. That raised alarms among traders, who pushed November light sweet crude up $1.73, or 2.8%, to $64.36 a barrel on the New York Mercantile Exchange.

Later in the day, a new prediction by the National Oceanic and Atmospheric Administration that the storm would veer sharply to the northeast, toward Florida’s Gulf Coast and away from oil platforms and refineries, caused oil futures to drop in after-hours trading.

“After Katrina and Rita, nobody wants to miss the next run-up in prices,” said Kyle Cooper, an energy analyst with Citigroup Global Markets in Houston.

Natural-gas futures for November delivery rose 66.8 cents to $13.887 per million British thermal units on the Nymex. Gasoline for November delivery rose 6.67 cents to $1.815 a gallon.

Gulf oil and natural gas production has been recovering slowly, with repairs “moving about a percentage point a day,” said a spokesman for the federal Minerals Management Service. On Monday, 66.4% of gulf oil production and 55% of natural gas output remained shut down, the agency said.

That slow pace could be interrupted even if Wilma doesn’t cause new damage because energy companies would evacuate workers as a precaution if the storm appeared to be heading for the gulf. Rigs and platforms in the gulf normally account for about 28% of U.S. crude oil production and 19% of its natural gas.

“It does imply that in 5 to 7 days there may be more rig evacuations and a slowdown in repairs,” said Mike Fitzpatrick, vice president of energy risk management for Fimat USA Inc.

One expert said that the markets responding early -- if prematurely -- to the Wilma threat might be a good thing for the economy and for consumers.

“You want the price to react quickly, have it rise now rather than have it nice and level and then go to the stratosphere in one day,” said Robert Michaels, a professor of economics at Cal State Fullerton who has worked as a consultant for gas producers and natural gas pipeline companies.