Hurricane Rita was on track yesterday to slam into a region of the Texas coast later this week that is home to a heavy concentration of refineries that turn oil into gasoline.
Although Rita could shift course before making landfall, industry officials were growing increasingly concerned by the hurricane's movement toward the Houston area. Five percent of U.S. refining capacity is still shut down in Louisiana and Mississippi because of Hurricane Katrina.
"The two worst-case scenarios for the impact on the refining industry would be what happened with Katrina and what looks like could happen with this one," said Bob Slaughter, president of the National Petrochemical & Refiners Association.
Texas is home to refineries that can process about 4.6 million barrels of oil a day, or about 27 percent of U.S. capacity, according to the U.S. Department of Energy. The area surrounding Houston and nearby Texas City is a major refining center, housing more than 13 percent of U.S. capacity, according to industry data.
Even before the recent hurricanes, the refining industry had been stretched to the limit as demand has grown faster than capacity. Four major refineries remain off-line from Katrina.
Depending on where Rita strikes and the extent of the storm's damage to refineries, analysts said, it could cause gasoline prices to rise or lead to isolated shortages. Katrina, which idled refineries and pipelines carrying gasoline, sent pump prices above $3 a gallon.
Refineries were preparing for the hurricane yesterday, in some cases evacuating employees and curtailing operations. BP PLC, which runs a refinery in Texas City that can process 437,000 barrels of oil a day, said it was halting operations as a precaution. BP's refinery already had been running below capacity because of an explosion earlier this year.
Even if there is not significant damage, analysts said, gasoline supplies would become tighter as a result of precautionary shutdowns, possibly affecting pump prices.
Some of the Texas refineries are better protected from water damage than those in Louisiana. For instance, the largest refinery in the country, Exxon Mobil Corp.'s Baytown facility outside Houston, is about 20 feet above sea level, far higher than the company's shuttered refinery in Louisiana, a spokesman said.