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Ike’s force still being felt at the gas pump

Gasoline prices spiked for a third straight day Monday even as power was restored to a number of massive refineries along the Gulf Coast, and industry officials said it may be several weeks before the nation's refining capacity is restored.
/ Source: The Associated Press

Gasoline prices spiked for a third straight day Monday even as power was restored to a number of massive refineries along the Gulf Coast, and industry officials said it may be several weeks before the nation's refining capacity is restored.

At least 14 Texas refineries closed before Hurricane Ike made landfall, removing more than 20 percent of the nation's petroleum refining capacity. The storm destroyed at least a dozen production platforms and drilling rigs in the Gulf of Mexico, and production is still shut down in the critical region.

Red Cavaney, president of the American Petroleum Institute, which represents the major oil companies, said refineries appeared to have escaped a repeat of the widespread damage three years ago.

"We've not seen anywhere near the water damage as we saw in 2005," according to Cavaney, who said refinery operation could resume in a matter of several weeks, not months as was the case after hurricanes Katrina and Rita.

Valero Energy Corp., North America's largest refiner, said it had regained limited power at two of three shuttered facilities — in Houston and Texas City — while its plant in Port Arthur remained dark.

"All three remain shut down, though crews are working around the clock on getting the refineries prepared for restart," spokesman Bill Day said in an e-mail.

Exxon Mobil Corp. said Monday electricity had been restored at its refinery in Bay City, east of Houston, and it was preparing to resume operations. That refinery is the nation's largest. The oil giant was still inspecting another of its refineries farther east in Beaumont, where power was still out.

ConocoPhillips said its Sweeny, Texas, refinery had power and the company's Lake Charles, La., refinery was operating at reduced rates.

But the pipes that bring crude into the refineries and those that carry finished products like gasoline away must also have power, and there were shortages all over the south and Midwest on Monday.

That has created problems for gas stations from the Gulf Coast to the Northeast.

The Sheetz convenience store chain said more than two dozen stations from North Carolina Maryland were without gasoline.

Long lines formed at stations in Texas and Chevron transport trucks were being sent to the Houston area to speed refueling at its stations.

Royal Dutch Shell said Monday 40 percent of Shell-branded stations in the Houston and Beaumont areas were open. "We are trying to restock these stations as quickly as possible, but sporadic outages should be expected," Shell said.

Overnight, retail gasoline prices nationwide rose an average of about a nickel for a gallon of regular gasoline, to $3.842, according to auto club AAA, the Oil Price Information Service and Wright Express.

Yet in some regions, particularly in the South, gas prices soared past $5.

North Carolina Attorney General Roy Cooper said that he has sent subpoenas to seven retailers who reportedly charged as much as $7.32 for a gallon for regular fuel.

More subpoenas are on the way, he said.

Analysts said high priced gasoline could be around for at least several weeks.

"We're looking at close to $4 a gallon for the rest of September," Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service. "People are going to observe more of this disconnect where retail prices move higher even though crude oil is trading below $100 a barrel."

Oil prices fell $5.47 and closed below $100 a barrel for the first time in six months Monday on the New York Mercantile Exchange. Crude has fallen about $50 from its all-time trading record above $147 in July as the global economy increasingly appears headed for a hard landing.

But that hasn't stopped the spike in spot gasoline prices caused by disruptions from the Gulf.

Plantation Pipe Line Co., which transports refined petroleum products to the southeastern United States, said it was delivering about 60 percent of its typical volumes because of limited refinery supply in Louisiana following Gustav. Ike limited supply even further.

Magellan Midstream Partners LP said its Galena Park terminal in the Houston Ship Channel flooded from storm surge and its terminal in East Houston also was damaged.

Power outages along the Gulf Coast continue to slow the restart of refineries. Virtually all oil production in the Gulf and about 94 percent of natural gas output remained shut-in Monday, according to the U.S. Minerals Management Service.

Utilities reported nearly 4 million customers without power as Ike powered its way from Texas into the Midwest and into the East on Sunday.

CenterPoint Energy Inc. said about three-quarters of its 2.26 million customers remained without power Monday morning. Entergy Texas reported that nearly all of its 395,000 customers in east Texas were without power. The utility is reporting more outages than what it had during Rita three years ago. It could be weeks before power is restored.

Outages also were reported in Arkansas, Missouri, Indiana and Ohio.