Updated from 12:38 p.m. EDT
Oil prices rose to another record high on Thursday despite weather forecasts showing Tropical Storm Katrina was shifting away from the Gulf of Mexico.
The crude contract for October delivery closed up 17 cents to $67.49 a barrel on Nymex, another all-time high closing price. Gasoline futures rose 3 cents to $1.96 a gallon, inching closer to the $2 a gallon record high reached last week.
Oil soared to a previous record of $67.32 Wednesday as another big weekly drop in U.S. gasoline inventories and the approaching tropical storm got traders nervous over a supply shortage.
Since then, however, Katrina has reportedly shifted toward southern Florida, and forecasts suggest it will later turn north, missing the oil-producing infrastructure in the Gulf.
Oil futures were lower throughout most of Thursday's session as the storm shifted, but turned higher late. The day-to-day news aside, refining capacity constraints and tight spare production capacity worldwide continue to support oil prices at levels not seen in more than two decades.
The Energy Department said Wednesday that gasoline inventories fell by 3.2 million barrels, an eighth consecutive weekly drop, and are at the bottom of the seasonal average.
That led to climbing retail gasoline prices, which rose this week to $2.61 a gallon, roughly 73 cents higher than a year ago. Retail gasoline has been at a nominal high for three weeks in a row.
For the first time in more than 20 years, high fuel prices have prompted a state government to intervene. On Wednesday, Hawaii enacted caps on wholesale gasoline prices in an effort to reduce costs at the pump, which rose to $2.76 a gallon in the state that day.
The state's public utilities commission said that starting Sept. 1, the two refineries operating in Hawaii, owned by
, won't be allowed to charge more than $2.1578 a gallon for regular unleaded gasoline, or about $2.74 a gallon including taxes, the
Price caps, however, weren't applied to retailers, who could potentially continue to charge a premium that would bring prices back up to where they are today.
John Felmy, director of policy, analysis and statistics at the American Petroleum Institute, an industry group, says he's "very concerned" about the price caps in Hawaii.
"Prices have led in the past and can still lead to gas lines at stations and to an economic downturn," Felmy says. "All it is, is regulating the wholesale side, which could lead to a consumer panic over supply shortages."
Felmy explains that just the idea of price caps could send motorists scrambling to secure gasoline in anticipation of a shortage.
Hawaii, he says, has an economy in which everything is significantly more expensive than in the mainland U.S. Gasoline is no different, as the costs of refining are more expensive and taxes are higher. Also, the two refineries operating in the state are relatively simple and can only process the light sweet crude, a significantly more expensive oil type.
Geoff Sundstrom at AAA (formerly the American Automobile Association), said that "given the historical experience we've had in the
1970s and 1980s, when price caps created real supply shortages, we are reluctant to embrace anything of this sort."
Analysts are going to be watching Hawaii as "an interesting experiment" to see whether suppliers actually turn away deliveries to the state.
In company news,
, which provides construction and engineering services to the oil industry, said its business units located in Canada, the U.S. and western Africa have been awarded multiple projects valued at $260 million. The deals include the construction of gas pipelines from the Canadian oil sands for
, as well as replacing and upgrading pipelines and equipment in Texas for
. Shares of Willbros jumped 41.23, or 7.7%, to $17.13.
approved a 2-for-1 split of its common stock, subject to stockholders' approval.
Major oil producers' shares were mixed Thursday.
fell 0.6%, and Chevron gained 0.07%.