Hurricane Rita could cause
a new gas price spike if as expected it hits the Texas Gulf Coast Friday
The timing and strength of the latest storm could cause worse spike
at the pumps than Katrina did.
Remember when gas spiked to $3-plus a gallon after Hurricane Katrina?
By this time next week, that could seem like the good old days.
Weather and energy experts say that as bad as Hurricane Katrina hit the nation's
supply of gasoline, Hurricane Rita could be worse.
Katrina damage was focused on offshore oil platforms and ports. Now the greater
risk is to oil-refinery capacity, especially if Rita slams into Houston, Galveston
and Port Arthur, Texas.
"We could be looking at gasoline lines and $4 gas, maybe even $5 gas,
if this thing does the worst it could do," said energy analyst Peter Beutel
of Cameron Hanover. "This storm is in the wrong place. And it's absolutely
at the wrong time," said Beutel.
Michael Schlacter, chief meteorologist at Weather 2000, said Rita now appears
most likely to hit between Port Arthur and Corpus Christi, Texas, sometime between
Friday afternoon and Saturday morning.
Just about all of Texas's refinery capacity lies in that at-risk zone. (For
a look at CNN.com's coverage of Hurricane Rita, click
"There is no lucky 7-10 split scenario to use a bowling analogy,"
he said. "If you're [a refiner] within 200 miles, you're going to feel
Compounding Katrina's impact
When Katrina hit, 15 refineries, nearly all in Louisiana and Mississippi, with
a combined capacity of about 3.3 million barrels a day were shut down or damaged,
according to the Energy Department. That represented almost 20 percent of U.S.
Within a week, almost two-thirds of that damaged capacity had resumed some
operations, according to the department. But four refineries with nearly 900,000
barrels a day of capacity are still basically shut down.
If Rita hits both the Houston-Galveston area, as well as the Port Arthur-Beaumont
region near the Texas-Louisiana border, that could take out more than 3 million
barrels of capacity a day, according to Bob Tippee, editor of the industry trade
journal Oil & Gas Journal in Houston.
"Before Katrina, the system was already so tight that the worst-case scenario
was for a disruption that took 250,000 barrels of capacity out of the picture.
That would have been considered a major jolt," said Tippee.
"We're already in uncharted territory now. We can't project what happens
from another shot the size of Katrina or worse."
Part of the problem is that skilled crews needed to make refinery repairs are
already busy trying to fix the Katrina damage. That would extend recovery time
"[Rita] could have a significant impact on supply and prices -- this really
is a national disaster," Valero
CEO Bill Greehey in an interview with Reuters Tuesday evening.
Gas not the only concern
Problems could spread beyond the gas pumps.
Tippee said that natural-gas prices could see a further spike, since so many
of the offshore platforms off of Texas produce natural gas, not crude oil.
And while gasoline imports have helped bring gas prices down from record highs,
there isn't as much potential for heating-oil imports, he noted.
"Gasoline tends to obscure everything, especially since we aren't paying
heating bills right now," said Tippee. "But we were already looking
at a winter fuel problem. We're about to take another hit that will cause a
lot of problems."
Schlacter said even the oil platforms off the Louisiana Gulf Coast, which are
not likely to take a direct hit from Rita, could be affected by large waves
churning up the Gulf of Mexico as the storm passes to the south. Waves of as
much as 40 to 50 feet could hit the platforms off the Texas Coast, he estimated.
Tippee said that production across the Gulf is already being affected by oil
workers off platforms ahead of the storm. And it's not just domestic oil
The Louisiana Offshore Oil Port (LOOP), the nation's largest gateway for overseas
oil, stopped accepting deliveries of its 1.2 million barrels of oil a day Wednesday
afternoon due to high seas, LOOP spokeswoman Barb Hesterman told Reuters. She
said the disruption was expected to be "for a short time."
But if Katrina is any guide, it could take several days after Rita passes for
production to resume even at oil and gas platforms that escape damage.
"There were several days where if you could have gotten out to the platform,
you could have started it back up, but you couldn't find the boats or helicopters
you needed to get back to the platforms," he said.