Britain on course for lasting pain at the petrol pumps

Katrina’s effect on the oil price may have been short and sharp – pushing crude to a $72 peak on Tuesday before it fell back to $67 by the end of the week – but the impact on petrol prices shows signs of lasting longer.

Last week some Americans were already paying more than $3 a gallon for gasoline – $1.20 more than a year ago – and were being told that the figure could go well above that in the coming weeks.
Paul Horsnell, oil analyst at Barclays Capital, says: ‘What Katrina has done is make an already tight gasoline situation far more serious.’ He adds that this means ‘a significant contribution from the demand side in terms of demand suppression and would appear to imply sharply higher … retail prices for a period of some weeks.’ In other words, drive less or pay more.

Observer (UK)