HURRICANE PAIN KATRINA GIVES GAS BUYERS HEARTBURN.

Byline: Brent Hopkins Staff Writer

Hurricane Katrina carved a destructive swath through the heart of America's oil industry Monday, prompting energy market watchers to warn of even higher gasoline prices.

The Gulf Coast region accounts for about one-fourth of domestic production and - from platforms to refineries to oil tanker imports - it was nearly all shut down for the next few days by Katrina, a Category 4 storm when it came ashore. This sent the jittery trading market into quick action, pushing oil to a record $70.80 overnight before it settled at $67.20 per barrel Monday.

While California refiners rely very little on Gulf Coast oil to produce their special blend of gasoline, any interruption in supply could affect the state's notoriously volatile market.

With refinery capacity diminished as a result of equipment problems, an already stressed marketplace will feel even more strain until damage assessments are completed later this week.

``We've got tighter supplies, increased demand for Labor Day weekend and now we have higher crude oil,'' said Rob Schlichting, a spokesman for the California Energy Commission. ``All of those will work together to bring up prices at the pump, I'm afraid.''

A gallon of regular gasoline currently costs $2.793 in Los Angeles, according to the Automobile Club of Southern California, a price that's been fairly steady in recent days.

With refinery constraints and the bump up in crude costs, industry observer Denton Cinquegrana expects a swift run-up as the industry figures out how much damage Katrina caused.

``It'll have a cumulative effect across the country,'' said Cinquegrana, a markets editor with the private price tracker Oil Price Information Service. ``Even with no impact on West Coast refineries, the panic in the market will raise prices everywhere. Short term, we're definitely going to see some spikes of up to a dime, maybe even by the weekend.''

The concern about a potential shortage prompted Sen. Barbara Boxer, D-California, to urge President George W. Bush to stop filling the Strategic Petroleum Reserve. The reserve is a series of four artificial caverns carved out of salt domes along the Gulf of Mexico. Each is located near a major refining center.

The Associated Press reported that administration officials said Bush would likely tap the stockpile to help refiners affected by the storm. He did so last fall, lending them oil after Hurricane Ivan, which they later returned to the reserve.

In a perverse way, California's extremely high prices might shield the state from the even more dramatic increases expected in the Midwest. With a statewide average of $2.801, gasoline already is more expensive in California than in any other state except Hawaii.

Rayola Dougher, manager of energy markets for the American Petroleum Institute trade group, said the high price of California formulation gas makes oil companies less likely to sell it out of state to areas more directly affected by the hurricane damage.

``You are insolated from the rest of the market, so you're better off than most,'' she said. ``It's a big temporary halt in the system, so we've got to see what the damage was and what we've got to do to get things up and running again.''

Brent Hopkins, [phone]

brent.hopkins(at)dailynews.com

CAPTION(S):

photo, chart, map

Photo:

(color) Traders in crude oil futures mop some brows and chew some fingernails Monday at the New York Mercantile Exchange.

Mary Altaffer/Associated Press

Chart:

HIGHER PUMP PRICES

SOURCE: AAA fuelgaugereport.com

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Map:

WHERE OIL RIGS & REFINERIES MAY BE AFFECTED

SOURCES: FEMA; NOAA; Associated Press

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