Fuel Prices Skyrocket - Katrina's effects are felt here

Besides the devastating human toll of Hurricane Katrina - thousands feared dead, many more left homeless - the storm has paralyzed the country's leading energy hub.

Oil refineries and pipelines in Mississippi and Louisiana and production platforms in the Gulf of Mexico, which account for 25 percent of domestic oil production and 10 percent of the nation's oil refineries, were severely damaged by winds and floods. As a result, the price of gasoline and heating oil has gone skyward, and that of other consumer goods, including some foods, is expected to follow suit.

Gas sellers acted swiftly to raise prices on the South Fork last week. On Sunday the gasoline prices at Marshall and Sons in Montauk were $3.90 per gallon for regular and $4.12 for "supreme." Regular was selling for $3.37 there last Thursday.

Regular gasoline cost $2.87 per gallon at the Hess station in Wainscott on Aug. 30 and $3.55 on Tuesday. It was selling for $3.17 a gallon at the Mobil station in East Hampton on Saturday and had gone up to $3.32 a gallon on Sunday.

On Tuesday morning, AAA's daily online survey said that gasoline prices for Nassau and Suffolk Counties averaged $3.33 for regular, which is 79 cents more than one month ago, and $3.64 for premium unleaded, an 87 cent increase.

Cliff Clark, the president of Shelter Island's South Ferry company, said he had no immediate plans to raise fares but that the increase in fuel prices was costing his business an extra $300 per day - a month of which would more than cover the monthly payment for a new ferry.

Mr. Clark remarked on a conversation he had early last week with an acquaintance who owns a gas station. The owner had already raised his prices, even though his first shipment of expensive fuel had yet to arrive. "I think it's despicable," Mr. Clark said. "The 'threat' of high prices is immediately being felt at the pump."

He pointed out on Friday that consumers in the United States have paid far less for gasoline than consumers in Europe and in the Caribbean, where the price per liter (about a quarter of a gallon) is over $4.00. "We as a nation are really being challenged. For so long we've stuck our head in the sand, and now we are paying the price for it."

As it becomes cost-prohibitive for some people to drive, Jennifer Friebely, marketing director of Hampton Jitney, said, she anticipates an increase in ridership. "Gas prices are ridiculously high," she said. To help with conservation, Ms. Friebely said she hoped to encourage "drivers to get on the Jitney and leave their cars at home."

She said she was not sure if the Jitney would raise fares to deflect the higher cost of fuel. "We love our passengers and don't like to do things like that . . . unless it is absolutely necessary."

"We've had to raise our fares," said Wayne Lantini, general manager of Lindy's Taxi in Montauk.

"It seems like every week, we have to raise prices and it really hurts business. People are not tipping like they used to. That extra dollar, which used to go to the driver, is now being used to cover the increased cost of fuel."

"We're dying. Nobody's going prospecting," said Sima Freierman, the general manager of Inlet Seafood in Montauk, referring to the draggers that sail from Inlet's docks.

"Nobody is going looking to find squid. You can't prospect at these prices. The stocks are moving farther offshore this time of year," she said of the commercial fishermen's prey.

"The marginal guys won't make it. Hopefully the price will go down. Suppliers are telling me they will."

On Friday, the commercial captains were paying $2.88 a gallon for diesel fuel - "the highest it's ever been." The price had been $2.58 on Aug. 30.

Ms. Freierman said the fishing fleet would not be able to add a surcharge to cover increased fuel costs as some other businesses have, although she did say that consumers may see higher prices at the cash register if delivery companies pass along a portion of their increased fuel costs.

"The way we raise food is dependent on petroleum," said Brian Halweil of Sag Harbor, a senior food researcher at the World Watch Institute in Washington, D.C. It is estimated that the average food item travels 1,500 miles from source to table, he said, and "an increase in fuel will be reflected in the price of food."

"Supporting local farmers is a lot less fuel-intensive," Mr. Halweil said.

"Because we are closer to the market, shipping less miles, our costs are lower and that should help us," said John Wesnofske of Remi Wesnofske Farms in Water Mill.

As of last week, Mr. Wesnofske said, his farm was packing three tractor-trailers a day, and he had seen an increase in the delivery price the drivers were charging. "The truckers pass it on," he said.

"It's a shame what is happening right now," said Chris Schenck of Schenck Fuels in East Hampton, which supplies home-heating. "We're cutting back on inventory so we don't get stuck with overpriced fuel." Mr. Schenck said he hoped that prices might come down in the next month or so.

"It's not people at this level that are raising prices. It's happening two levels above," he said on Friday. "We are doing what we have to do to survive - our margins are in the gutter."

"Two days ago, we couldn't get gas out. When it finally got here, it was 20 cents more per gallon."

As of Tuesday, according to Mr. Schenck, heating oil cost $2.97 per gallon, up from $2.85 last week and $2.50 two weeks ago. "Last year this time prices were approximately $1.85 per gallon," he said.

Mr. Schenck said customers were trying to get a jump on deliveries and that "we're having a hard time keeping up." The company has instituted an "EZ pay" program, similar to the Long Island Power Authority's "balanced budget" program to help consumers cope with rising heating prices. Last year customers who paid in advance received a 20-cent per-gallon discount, a discount that as of last Thursday had been reduced to 7 cents per gallon.

"We're not like gas[oline] companies," said Meg Zulaski at Pulver Gas in Bridgehampton, which sells propane. "We are paying more to get the same product. We are customers of the refineries."

Ms. Zulaski advised consumers to take certain measures now, such as making sure that their houses are well insulated and budgeting for fuel.

"It's a little early to predict how much prices will be affected by Katrina," she said. "We receive some of our product from there, but it is not the only place."

With Reporting by Russell Drumm