Houston refining industry at a standstill

Hurricane Rita’s path will determine if gas prices stay high

DALLAS – Hurricane Rita’s wandering aim could determine whether motorists face a small and temporary bump in gasoline prices or must adjust their budgets to absorb a bigger hit over a period of weeks.

Oil-industry experts say Rita’s changing projected path and wavering power make it difficult to predict how much damage it will do to refineries on the Gulf Coast in Texas and Louisiana.
But experts agree that the Houston area _ home to 13 percent of the U.S. oil-refining capacity _ will not be spared the brunt of the storm.

The storm will reduce the supply of gasoline and other refined products no matter what because just about every major refinery around Houston and Port Arthur, Texas, 100 miles away on the Gulf Coast, shut down ahead of Rita’s arrival. Together, the areas represent 20 percent of U.S. capacity.

“Best case, it costs us 2 million barrels a day (of refining production) for about three days,” resulting in gas prices briefly rising 5 to 15 cents per gallon, said Fadel Gheit, an energy analyst for Oppenheimer & Co. “But if it hits Houston hard, four or five refineries could be flooded.”

AP