WASHINGTON -- The damage inflicted by Hurricane Katrina on the Gulf Coast could lead to skyrocketing prices and gas shortages in Georgia, officials said Wednesday.

The two pipelines that bring gasoline and jet fuel to the region were knocked out of commission when the storm roared through Louisiana and Mississippi, according to a report in the Atlanta Journal-Constitution. The infrastructure has been inoperable for at least two days, and gas prices could soar to $3 a gallon and above, the reports suggest.

The shortage could severely hamper motorists and operations at Hartsfield-Jackson International Airport.

In an effort to ease the growing gas shortage, Gov. Sonny Perdue announced Wednesday that the state will temporarily waive requirements for gasoline additives that are added to fuel in the Georgia.

"In the aftermath of Hurricane Katrina, it is important for the state to keep gas prices as low as possible for the people of Georgia and our economy," Perdue said in a statement.

The move, in effect until Sept. 15, means the additives designed to help fuel burn cleaner and reduce vehicle emissions and smog will not be required. Suppliers should be able to get gasoline into the state's fuel supplies easier and relieve a projected fuel crunch.

"While the state's requirement for cleaner burning gasoline is an important part of the plan to improve air quality in metropolitan Atlanta, this emergency has occurred late in the smog season and easing our requirements will help ensure an adequate supply of gasoline for Georgians," said Carol Couch, director of the state Environmental Protection Division.

Colonial Pipeline Co., a gas supply firm based in Alpharetta, said it has activated a plan that will boost the flow on its pipeline system.

The moves are designed to return its line to service by this weekend, the company said in a written statement.

"We will continue to work closely with the electrical utilities as they work to restore power to so many communities across Louisiana and Mississippi," David Lemmon, the firm's president and CEO said in a statement. "In the interim, Colonial will be able to restart our pipeline and provide some level of service along our entire system, from Houston to New York Harbor."

Motorists Feel Pain at the Pump

At one Gwinnett County gas station, motorists expressed alarm.

"I may have to go to the country and buy horses," said Brenda Keeler as she bought gas. "It's a downward spiral."

"It's just too much," said Peggy O'Brien. "You have to get around (so) you don't have a choice."

Gas Woes May Spread to Entire Nation

Gasoline prices surged above $3 a gallon in many parts of the country Wednesday and shortages cropped up in some areas as supply disruptions from Hurricane Katrina widened.

Gas prices jumped by more than 50 cents a gallon overnight in Ohio, 40 cents in Georgia and 30 cents in Maine. The increases followed price spikes on wholesale and futures markets after the hurricane knocked off-line refineries and pipeline links along the Gulf Coast that provide about a third of the country's gasoline supplies.

Concerns are now mounting over limited supplies of gasoline, including the possible return of long lines and gas rationing reminiscent of the 1970s gas crisis.

"There is a possibility that we will see some form of rationing with the conditions being as bad or worse than many people thought," said Fred Allvine, an oil industry expert at Georgia Tech.

This week's increase come on top of a 40 percent price rise in the last year that pushed up the average retail price of unleaded regular to $2.61 a gallon nationwide last week, Energy Department figures show.

Analysts said the squeeze should ease once electricity is restored to Gulf Coast pipelines and refineries. But it will be days before a full assessment of wind and flood damage can be done, and at least that long before pipelines and refineries return to service.

The market did receive some help Wednesday when the federal government said it would loan oil from the Strategic Petroleum Reserve to refiners facing shortfalls. And the Environmental Protection Agency said it would temporarily allow gasoline retailers nationwide to sell fuel that does not meet stringent summer air-quality standards.

"The EPA waiver was a big move," said John Kilduff, an analyst at Fimat USA in New York.

Owner Mike Brown looked outside the office of his Chevron gas station in Chamblee on Wednesday and saw something he hadn't seen in years -- a customer topping off the tanks of not one, but three cars, and then filling up a handful of gas cans. "So the hoarding begins. I topped off my truck today," said Brown.

In Arizona, Circle K Stores Inc., one of the Phoenix area's largest gas-station operators, reported outages at 10 to 15 percent of its 256 service stations in Maricopa County, although state officials said the gasoline supply problems were not widespread.

Several gas stations in the Milwaukee area ran out of gas for several hours at the time, having to post "Out of Gas" signs at their pumps. The outages were blamed more on logistical problems on the supply end than any increase in demand.

"Everybody is really trying hard. But it has been very, very difficult to get enough gasoline," said Jim Fiene, senior vice president of the Open Pantry convenience store-gasoline station chain in southeast Wisconsin.

The problems soon could extend far beyond motorists' wallets.

Energy experts say they are concerned about how hurricane damage to Gulf Coast natural gas and heating oil facilities will affect heating bills this winter. Rising jet fuel costs because of the hurricane also have put additional pressure on cash-strapped airlines.

"It's much farther-reaching than me just handing over green dollars at a gas pump," said Steve West, 52, an account manager at Worldspan in Atlanta. "I was around back in the 1970s when there was no gas, so I've been through that before and I know that was not pleasant."

In scenic Asheville, N.C., local officials asked residents to conserve gas and government workers were ordered to limit nonessential travel.

In Georgia, where long lines were reported across the state, Gov. Sonny Perdue urged residents to curb discretionary driving and instead "spend the time with your children, your parents and your families at home." A suburban Atlanta vanpooling program also reported a 50 percent jump in participants since Hurricane Katrina slammed into the Gulf Coast on Monday.

"I never rode the bus before but I'm definitely considering it now," said Tammy Nelson, 29, of Decatur, who was topping off her gas tank at an Atlanta gas station in response to the rapidly rising gas prices.

The latest nonpartisan Field Poll found that California residents are changing their behavior as a result of high gas prices. Forty percent -- and 54 percent of those making less than $40,000 -- said they have cut back spending in other areas. About two-thirds of residents say they shop around for filling stations offering cheaper gas, and 59 percent said they are driving less.

Matt McKenzie, spokesman for from AAA-Northern New England, predicted gas prices would hit $3.70 to $3.80 by month's end in that region of the country, causing frugal motorists to begin carpooling, cutting back errands and maybe even scaling back their fall leaf-viewing trips.

"I think the days of cheap gas are done. They've gone bye bye," said Mark Dugas as he was filling his Ford Mustang at a gas station in Rhode Island.

Not everyone is convinced gasoline lines are in consumers' future. "Supplies are going to be bottlenecked and people are going to take advantage of that at various levels, they will jack prices up a little bit," said Anthony Sabino, a professor at St. John's University in New York. "But there are no gas shortages. There is plenty of gasoline in the pipeline."

Uncertainty Roils Oil Markets

Gasoline prices leaped Wednesday as key refineries and pipelines remained out of service following Hurricane Katrina, crimping supplies and leading to caps on the amount of fuel delivered to retailers.

The U.S. government said it would loan oil to refiners facing shortfalls. Crude futures prices fell but remained close to $69 a barrel.

Some of the knottiest issues still to be resolved will be restoring electricity to Gulf Coast pipelines and refineries, which are also suffering from flooding that may have left some important equipment submerged. It will be days before a full assessment of the damage can be done, industry officials and analysts said.

A significant amount of oil and gas production in the Gulf of Mexico remains shut and reports of banged-up platforms and rigs continued to trickle in as companies conducted aerial inspections of offshore facilities.

Onshore, wholesale gasoline suppliers have begun capping the amount of fuel they sell to retailers in certain markets to make sure retailers do not take delivery of more fuel than they actually need. Analysts said they do not anticipate widespread fuel shortages and cautioned motorists not to top off tanks out of fear.

With retail gasoline prices surging to record highs and motorists facing $3 a gallon at the pump in a growing number of markets, BP PLC said in an e-mail to clients that it is making "pricing decisions with prudence and restraint in the wake of this natural disaster."

Light sweet crude for October delivery on the New York Mercantile Exchange fell 84 cents to $68.97 a barrel, down from an overnight high of $70.65. On Tuesday, oil futures settled at $69.81, the highest closing price on Nymex since trading began in 1983, although still below the inflation-adjusted high of about $90 a barrel that was set in 1980.

But October gasoline futures surged 17.55 cents to $2.65 a gallon on the Nymex. That is 72 cents, or 35 percent higher, than they were on Friday.

"There's too much uncertainty," said analyst John Kilduff at Fimat USA in New York.

While the details were being worked out about how much oil would be loaned from the U.S. Strategic Petroleum Reserve -- and which refiners would receive it -- European nations began considering the release of their own government-controlled stockpiles of gasoline and heating oil, according to officials at the Paris-based International Energy Agency. The officials demanded anonymity because the consultations were confidential.

"We're the highest (wholesale) price market in the world right now," said Lawrence J. Goldstein, president of the New York-based nonprofit Petroleum Industry Research Foundation. "We're going to attract a lot of supply here. Price is a magnet for supply."

In another attempt to ease the crunch on motor fuel supplies, the Environmental Protection Agency said it would temporarily allow retailers nationwide to sell gasoline and diesel that does not meet stringent summer air-quality standards.

Gasoline supplies are tightening in some states because some major Gulf Coast energy companies, which were already struggling to meet rising demand before Katrina plowed through the region, have been plagued by floods and power outages that have made it impossible to produce and distribute fuel.

At least eight Gulf refineries remain out of service, and will be for days if not weeks, according to analysts, though most of their owners have not yet publicly announced the extent of any damage. Companies also worked Wednesday to touch base with their employees, some of whom remain unaccounted for. Exxon Mobil Corp., for example, set up a hotline for its workers to call.

Several pipelines that carry gasoline, heating oil and jet fuel to other markets have been stymied by disruptions to power grids and utility workers from around the country converged on the Gulf Coast to help restore electricity.

The shutdown of a pipeline that carries crude oil from the Gulf of Mexico to the Midwest has increased the need for Canadian imports, industry officials said. And the shutdown of pipelines that carry various fuels to markets on the East Coast means that more gasoline and diesel will have to be shipped by barge and by truck, according to John Eichberger, director of motor fuels at the National Association of Convenience Stores.

"The infrastructure was already strained before the hurricane," said oil analyst Fadel Gheit at Oppenheimer & Co. in New York. "The hurricane has made a bad situation worse."

The U.S. Minerals Management Service said Tuesday that 95 percent of the Gulf of Mexico's oil output was out of service, with more than 4.6 million barrels of production lost since Friday. The agency said 88 percent of natural gas output was shut down, resulting in a loss of 25.4 billion cubic feet of lost production since Friday.

While the loss of oil is significant, Energyintel analyst Tom Wallin said Katrina would likely have a more serious impact on the nation's supply of natural gas.

"Crude oil production could be replaced by a release of barrels from the U.S. strategic reserve," he said. "There is no such safety valve for natural gas."

Natural gas futures fell 35.9 cents to $11.30 per 1,000 cubic feet on Nymex. That is almost double the price from a year ago.

wsbtv.com Staff Writer Alfred Charles and Channel 2 Action News reporter Ryan Young contributed to this report.