Energy companies yesterday were shutting down refineries that can produce nearly a quarter of U.S. gasoline, jet fuel and other oil products in advance of Hurricane Rita, a precautionary measure that threatens to push prices higher.
The amount of the damage to refineries on the Texas and Louisiana coast, and the length of time they remain idle, will determine the extent of price increases and the availability of the supplies, analysts said.
The hurricane was set to strike one of the nation's most important refining hubs. "If you had to pick a single area, it probably ranks as the top one," said David G. Freyman, a refining specialist at Barnes & Click Inc., an international consulting firm based in Dallas.
Even if Rita does not significantly damage refineries, a temporary shutdown would take gasoline off the market at a time when supplies already are tight and prices high. Isolated shortages of gasoline could occur after Rita strikes, as happened after Hurricane Katrina, officials said.
"It is very hard at this point in time to forecast either length of time where there may be disruptions or where they will occur," Energy Secretary Samuel W. Bodman said. "But I think it likely to be that there will be some disruption in terms of supply of motor fuels."
Bodman said the United States is expecting more imports of gasoline, which could help offset lost production at refineries. Foreign producers stepped up shipments of gasoline to the United States after Katrina knocked out refineries in Louisiana and Mississippi.
The area that could be affected by Rita includes 27.5 percent of the nation's refining capacity of 17.1 million barrels of oil a day, according to the American Petroleum Institute, a Washington-based industry group.
Refineries that can process more than 4 million barrels of oil a day were being shut down yesterday in an area stretching from Houston to Lake Charles, La. That includes the nation's largest refinery, Exxon Mobil Corp.'s operation in Baytown, Tex., which can process 557,000 barrels of oil a day.
The largest threat to refining equipment is a storm surge, analysts said. Some of the refineries in the path of Rita are at a higher elevation than those damaged by Katrina, while others are in low-lying areas and are at high risk.
Oil companies continued evacuating workers and securing equipment. U.S. energy officials were monitoring the storm's progress. They said the nation's Strategic Petroleum Reserve, which is in underground salt caverns in Texas and Louisiana, is designed to withstand Category 5 hurricanes.
U.S. officials said they are concerned about the impact of Hurricane Rita on natural gas and crude oil supplies. The storm is threatening production platforms in the Gulf of Mexico, some of which were damaged by Hurricane Katrina. The earlier storm also damaged onshore natural gas processing facilities in Louisiana, and Rita threatens additional facilities.
While the United States can compensate for disruptions to oil supplies with additional imports and by opening the Strategic Petroleum Reserve, natural gas supplies are more difficult to replace. Futures prices for natural gas on the New York Mercantile Exchange have been rising in recent days.
Nearly 92 percent of crude oil production in the Gulf of Mexico was shut down yesterday, amounting to nearly 1.4 million barrels a day of production, according to the Minerals Management Service. About 66 percent of natural gas production in the Gulf was shut down. The lost production is a result of lingering damage from Katrina and preparations for Rita.
Once the storm passes, production would not immediately resume. Companies will have to assess damage and make repairs. It can take days to restart refineries. Oil industry executives are concerned that employees who evacuated in preparation for Rita will take some time to return. They will likely need to tend to their personal property, and traveling in the affected areas will be difficult.
Oil industry representatives said Rita could bring a repeat of problems that occurred after Katrina. In that case, power outages interfered with pipelines that carry gasoline to the Washington area and other parts of the country, causing prices to spike and some stations to run out of fuel. Some refineries damaged by Katrina resumed production in several days while four remain shuttered with more significant damage.