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Gas price jump likely to mirror Katrina effect

WASHINGTON – Gasoline prices are expected to climb again because Hurricane Rita seriously damaged two major refineries in Port Arthur, Texas, and may have damaged as many as four more in Texas and Louisiana.

Hurricane Katrina last month idled four large refineries that provided 5 percent of the nation’s refining capacity, sending the average price for all three gasoline grades up by 38 cents a gallon, according to the Lundberg Survey. Rita may have knocked out more than that, leaving tight gasoline supplies even tighter.

“Now it’s really a question of how much damage there is,” said Kevin Lindemer, an oil expert with Global Insight in Boston. Lindemer predicted price increases similar to those in the wake of Katrina for the next two or three weeks – “assuming the damage assessments don’t get worse than we’ve already heard.”

The Houston-area refineries that account for about 13 percent of the nation’s refining capacity appeared to escape serious harm. There also didn’t appear to be significant damage to the electric power grid, meaning that some pipelines and refineries may be able to resume operations later in the week.

“Based on our modeling and our initial reports, it appears that Houston’s shipping channel may have received minimal exposure to the storm. So we are cautiously optimistic about refineries there,” said Craig Stevens, a Department of Energy spokesman. “However, those around Port Arthur seem to have borne the brunt of the storm, and we will wait for additional reports and assessments from that area.”

The gasoline outlook could get worse after damage assessments at large refineries in nearby Beaumont, Texas, and Lake Charles, La., which suffered the strongest winds and worst flooding.

In a statement Saturday afternoon, Royal Dutch Shell said that its Motiva refinery in Port Arthur, with a capacity of 285,000 barrels a day, sustained damage to a cooling tower.

Valero Energy Corp. said that its Port Arthur refinery, with a capacity of 255,000 barrels a day, sustained “significant damage to two cooling towers and a flare stack.” The company anticipated that “it will take two weeks to a month to implement the necessary repairs and restart the refinery.”

ExxonMobil didn’t provide damage assessments for its massive Beaumont refinery, which has a capacity of 348,000 barrels a day. Citgo and ConocoPhillips didn’t immediately discuss damage to their Lake Charles refineries, which have capacities of 324,000 and 239,000 barrels a day, respectively. The French company Total didn’t report on damage to its 233,000-barrel-a-day refinery in Port Arthur.


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