Refineries: Oil experts breathed a guarded sigh of relief yesterday and crude prices fell sharply as Hurricane Rita's path shifted away from Houston, the heart of the US refining industry.
"Prior to its current path, we were looking at the worst-case scenario for the industry with the hurricane striking Houston," said John Kilduff, senior vice-president for energy risk management at Fimat USA.
US energy companies have been shutting down refineries that can produce nearly a quarter of the country's petrol, jet fuel and other oil products in advance of the hurricane. This precautionary measure threatened to push prices higher.
The area threatened is one of the nation's most important refining hubs.
Some 27.5 per cent of the nation's refining capacity of 17.1 million barrels of oil a day is in the area, according to the American Petroleum Institute.
"If you had to pick a single area it probably ranks as the top one," said David Freyman, a refining specialist at Barnes & Click Inc, an international consulting firm based in Dallas.
Refineries were being shut in an area stretching from Houston to Lake Charles, Louisiana. They included the nation's largest refinery, Exxon Mobil Corp's operation in Baytown, Texas, which can process 557,000 barrels of oil daily.
Even if Rita does not significantly damage refineries a temporary shutdown will take petrol off the market at a time when supplies already are tight and prices high.
"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," said energy secretary Samuel Bodman, "but I think it likely to be that there will be some disruption in terms of supply of motor fuels."
Mr Bodman said the US was expecting additional imports of petrol, which could help offset lost production at refineries.
Foreign producers stepped up shipments after Katrina knocked out refineries in Louisiana and Mississippi.
US officials also said they were concerned about natural gas and crude oil supplies. Rita is threatening production platforms in the Gulf of Mexico, some of which were damaged by Katrina.
The earlier storm also damaged onshore natural gas processing facilities in Louisiana. - (Los Angeles Times-Washington Post service)