Bush urges conserving fuel

After initially dropping on relief that Hurricane Rita inflicted less damage than feared, gasoline and crude oil prices wound up rising yesterday after President Bush urged motorists to conserve gas until it's clear how long Gulf Coast refineries will remain shut down.

''We can all pitch in by being better conservers of energy," Bush said after getting a briefing from Energy Department officials. ''People need to recognize the storm has caused disruption. The storm affected the ability to get gasoline to markets."

Bush's comments appeared to deflate earlier optimism that petroleum markets could settle down after back-to-back hurricanes slammed the US oil patch. After dropping by 4 cents a gallon in early trading yesterday, wholesale gasoline for delivery next month closed up 4 cents for the day at $2.14 a gallon in New York Mercantile Exchange trading, which remains down from its closing high of $2.61 on Aug. 31. Oil futures for October delivery closed up 2.5 percent at $65.82 a barrel, and heating oil and natural gas also rose.

At the retail level, however, government and energy industry officials said it remained clear that motorists won't face the kind of sudden gasoline price spikes that ensued after Hurricane Katrina slammed into Louisiana before Labor Day Weekend, a major travel period.

Average pump prices in Massachusetts fell 2.8 cents yesterday to $2.88, according to the daily survey by the American Automobile Association and Oil Price Information Service, a New Jersey price-tracking firm.

''I haven't seen any wholesale price spikes coming yet," said Tom Pickett, owner of Arthur's Sunoco in Mattapan, who expected to have to buy his next tanker-load of fuel as soon as this evening.

As of late yesterday, four refineries in Port Arthur, Texas, and Lake Charles, La., representing about 6 percent of total US gasoline production capacity, were damaged and expected to remain closed for up to a month. Four more smaller refineries in Mississippi and Louisiana that account for another 2 percent of US production remain shuttered because of Katrina.

Among the dozen other Gulf Coast refineries that shut down before Rita hit land early Saturday, several expected to resume operations this week.

But energy officials also were struggling to predict how soon electricity could be restored to other refineries that were not directly damaged by the storms. The stretch of Gulf Coast from Pascagoula, Miss., to Corpus Christi, Texas, refines about 30 percent of the nation's gasoline.

Nationally, the average price of gasoline has risen 1.7 cents in the last week to $2.80 per gallon, which is 89 cents higher than the same time a year ago, according to a weekly survey by the government's Energy Information Administration. New England gas prices have dropped 5.4 cents to an average $2.86, but prices jumped 6.8 cents in Gulf Coast states to $2.72.

Wholesale traders appeared to be bidding gasoline prices up because ''you don't know how long" the refineries will be out of commission, said Andrew Lebow, an oil trader for Man Financial Inc. in New York. Because the United States has a very small cushion of additional refining capacity and no new refinery has been built since 1976, even small reductions in supply and output can trigger price spikes.

Bush called on Congress to ease environmental regulations that he said have thwarted construction and expansion of refineries. The president also said he would release more oil from the nation's 700-million-barrel Strategic Petroleum Reserve to make up for oil production that has been shut down by Katrina and Rita.

As of yesterday virtually the entire output of the gulf region, which accounts for 29 percent of domestic oil production, was shut down. Gulf gas rigs, which normally provide 19 percent of US natural gas, also were operating at less than one-third capacity.

''The storms have shown how fragile the balance is between supply and demand in America," Bush said. ''We need more refining capacity."

But Democrats and environmentalists blasted the administration. Kevin Curtis, vice president of the National Environmental Trust, said, ''It's clear that the president and his allies in the House are using Katrina as cover for ramming through proposals to weaken the Clean Air Act."

Peter J. Howe can be reached at howe@globe.com. Material from Globe wire services was used in this report.