Most Texas Refineries Spared

Hurricane Rita will cause some scattered gas and oil shortages in the coming days, but the storm's impact will not be as serious as once expected, Sen. Kay Bailey Hutchinson, R-Texas, told co-anchor Tracy Smith on The Saturday Early Show.

As the storm raged, the torches of oil refineries could still be seen burning in the distance from downtown Beaumont. Officials had worried about the storm's threat to the refineries and chemical plants strung along the Texas and Louisiana coast. They represent a quarter of the nation's oil-refining capacity, and business analysts said damage from Rita could send gas prices as high as $4 a gallon. Environmentalists also had warned of the risk of a toxic spill.

"Had the Houston, Galveston, Texas City area [been] hit really hard, it could have made a huge difference in gasoline prices for every American," Sen. Hutchinson said. "As it is, there will be some shortage because of the Port Arthur area and just the lapse that we've had."

Nineteen of Texas' 26 refineries, with a combined daily capacity of nearly five million barrels, had been shut in anticipation of the hurricane, according to the Energy Information Agency. These included facilities operated by operated by BP PLC, Royal Dutch Shell PLC and Exxon Mobil Corp.

"As it is, there will be some shortage because of the Port Arthur area and just the lapse that we've had," Hutchinson said. "They did stop when the evacuations started in earnest, so we've had two or three days of lapse but I think we can get up to speed quickly and hope that the gasoline prices will not spike too much."

The biggest hit was taken where the hurricane made landfall, in the Port Arthur and Beaumont areas which do have major refineries. "I believe that the Exxon Mobil in Beaumont is probably OK," the senator said. "We're going to see how the others are down closer to the coast in Port Arthur."

There's about a-million-barrels-a-day production in Port Arthur and in the Beaumont area, estimates Tom Kloza, an analyst with the Oil Price Information Service. "Probably, at this point," he says, "based on everything I've seen, the most likely thing we my see is some flooding and might lose some refineries for a matter of weeks, hopefully not months. We're talking about 6 percent of our production and we have lost 6 percent of our production after Katrina, so we will be at risk."

Low-lying Louisiana refineries were seriously damaged in Hurricane Katrina three weeks ago and four were still out of service on Friday

The oil industry was spared another hit because Hurricane Rita did not go up the Houston Ship Channel, Hutchinson said.

"My hope is that those refineries will start producing in Texas City and Houston very quickly," she added. "They had shut down, but I think they can start up quickly now."

Kloza expects gas prices to edge up, but not to the $4-$5 numbers some people have predicted for the remainder 2005. If Americans start driving more, it could combine with refinery problems that typically surface in the spring to bring another spike early next year.

The worst hit will be those paying for heating oil and natural gas. "If you happen to live in the Northeast around here, you're probably looking at a cost of about $3,000 or more to heat your home this winter. That is about three times what it was a few years ago."

What about another major storm?

"I hate to think that way as well," Kloza says. "So far, we've hit probably two of the main clusters of refineries in the U.S.: New Orleans and Port Arthur. If we get a hurricane that hits Houston or one that comes up the Delaware River, then all bets are off."