Even before she hits, Hurricane Rita already looks to have a bigger economic impact than even Katrina did.
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.
Gas prices are just now starting to come down after the post-Katrina run up. Now, it looks like they’ll be headed back up again.
Update: According to this CNN/Money article, Rita’s impact on the economy could make Katrina seem like a cakewalk:
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.
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. refining capacity.
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 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.
No matter how you cut it, this is not good. Hopefully, Rita will weaken enough or change course so that the impact on the refineries will be less severe than feared.
As James Joyner observes over at Outside The Beltway: “One obvious lesson from this mess is that concentrating most of our refining and distribution capacity in one region makes little sense.”
Apparently.
Technorati Tag: Hurricane Rita
