Refineries shut down; gas prices could spike

Last update: August 31, 2008 - 10:02 PM

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HOUSTON - Hurricane Gustav's threat to the Gulf Coast halted about 15 percent of U.S. refining capacity Sunday, though for now prices at the pump have not risen dramatically.

However, analysts and others say a prolonged disruption in refining operations could cause price spikes of 20 cents per gallon or more, not unlike after Hurricanes Katrina and Rita devastated the region's energy infrastructure three years ago.

Exxon Mobil Corp., Royal Dutch Shell PLC and Valero Energy Corp., North America's largest refiner, were among the companies that have shut down their Gulf Coast refineries, primarily in south Louisiana.

Altogether, about 2.4 million barrels of refining capacity have been halted, about 15 percent of the nation's total, according to figures from Platts, the energy information arm of McGraw-Hill Cos.

"Fifteen percent looks small, but the impact is larger than meets the eye," said Eswaran Ramasamy, director of Platts' U.S. market reporting. "Louisiana refineries supply a chunk of the southern states' product needs -- gasoline, diesel, whatever."

For now, prices were climbing only slightly.

A gallon of regular gasoline jumped one-half cent overnight to a national average of $3.687, auto club AAA reported Sunday. The price rose slightly more than a penny Saturday.

Where prices go in the coming days and weeks depends largely on Gustav's path and intensity.

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