U.S. & World

NEW YORK (CBS) ― Hurricane Gustav could end up having a direct economic impact that'll be felt all over the country.

With oil companies shutting down production in the Gulf Coast region and evacuating workers, some experts say gas prices could hit record highs of $5 a gallon.

Billions of dollars are also at stake in other businesses, from tourism to shipping.

Retail gas prices swung higher Friday -- the first increase in 43 days -- as analysts warned that a direct hit on U.S. energy infrastructure by Gustav could send pump prices hurtling toward record levels.

Meanwhile, oil prices ended the day slightly lower, falling for a second straight session. But prices fluctuated sharply as some traders feared supply disruptions and others bet the government will release supplies from the Strategic Petroleum Reserve if Gustav wreaks havoc in the Gulf of Mexico area -- home to a quarter of U.S. crude supplies and 40 percent of refining capacity.

Gustav, which was approaching New Orleans as a category 3 storm with sustained winds of 115 mph as of late Sunday night -- three years to the day since Hurricane Katrina slammed into Louisiana and tore up oil rigs and refineries.

Fears of another monster storm sent wholesale gasoline prices shooting up in the Gulf region, forcing filling stations to pass on the costs by raising pump prices ahead of Labor Day weekend. Those prices, experts say, may only skyrocket from there.

A gallon of regular gasoline was nearly $3.70, according to auto club AAA, the Oil Price Information Service and Wright Express, up for the first time since prices peaked at an average $4.114 a gallon on July 17, an all-time high.

Jeff Rubin, chief economist at investment bank CIBC World Markets, said that record could be shattered if Gustav seriously disrupts offshore energy production.

In 2005, pump prices jumped from slightly more than $2 a gallon to above $3 after Katrina and Hurricane Rita destroyed more than 100 oil platforms and damaged several refineries.

"The price consequences could be even worse this time," Rubin said in a report, noting that oil and gasoline inventories are lower than when Katrina and Rita hit. "Any replays of the 2005 storm season could see gasoline prices soar to $5 per gallon."

Gustav was bearing down on the Gulf Coast after triggering floods and killing 59 people in Haiti and eight more in the Dominican Republic a few days earlier.

Light, sweet crude for October delivery fell 13 cents to settle $115.46 a barrel on the New York Mercantile Exchange, after earlier rising as high as $118.76. On Thursday, prices fell $2.56 at $115.59 a barrel, the first time this week it closed lower.

Analysts attributed the volatility to doubts over whether Gustav will affect offshore energy production, as well as speculation that the Energy Department will tap the Strategic Petroleum Reserve should the storm threatens supplies.

"Until this hurricane hits, the trend has to be higher toward the $120 level," said Jonathan Kornafel, Asia director for brokerage Hudson Capital Energy in Singapore. "If this turns out to be a nonevent, the market could really come roaring back down."

As Gustav advanced, oil companies were pulling employees off installations.

Royal Dutch Shell PLC has evacuated nearly 670 workers. BP PLC was also removing personnel from the region, while Exxon Mobil said it was bracing its structures for heavy wind and rain.

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