Analysts worried about threat to refinery production by storm

Some analysts are concerned that gasoline prices could spike higher in the wake of Hurricane Rita than they did after Hurricane Katrina hit the Gulf Coast of Louisiana and Mississippi a few weeks ago.

If the Rita continues on the path currently projected, it could hit the Texas coast between Corpus Christi and Port Arthur sometime Friday night or Saturday morning. Nearly all of Texas’ oil refining capacity is within that zone and any damage caused by the storm could severely damage the United States’ ability to refine oil into gasoline.

If Rita hits that region and damages refineries, over 3 million barrels per day of refining capacity could be taken offline. A bit more refining capacity than that, around 3.3 million barrels per day, was affected by Katrina.

Within a week of the storm around two-thirds of that capacity had been brought back online, but approximately 900,000 barrels per day of refining capacity remains idle.

However, if refining capacity equal to that disabled by Katrina is taken out by Rita, recovery would be slower because the crews needed to bring the refineries back online are already busy trying to fix the refineries still down due to Katrina.

Estimates are that if Rita hits the United States’ refining capacity as badly as Katrina did, US consumers could see prices at the pump of as much as $5 per gallon in the near future.