There was a rush for gasoline in Houston Thursday.
“The moment it started gushing fuel into the tanks here, the cars started lining up at this gas station,” said one man.
Plastic bags cover bone-dry pumps in Covington, La., while refineries on the Texas coast begin shutting down.
All are signs of what one oil analyst called the worst-case scenario — a second deadly hurricane bearing down on the nation's oil industry and threatening to take another big bite out of consumers' wallets.
“Rita is set to knock off 26 percent off the U.S. refining capacity, which is going to push gasoline prices upwards of three and four dollars a gallon in the coming days,” says John Kilduff with the USA Energy Risk Management Group.
Some 21 refineries in Texas and Louisiana are in Rita's reach, producing everything from heating oil to jet fuel to gasoline. It is an industry already reeling from a direct hit by Katrina. Four refineries are shut down, including the Murphy oil facility and two others here in the New Orleans area.
But as consumers brace for another super price spike, there are accusations of price gouging and profiteering. The oil companies — which reported profits of $29 billion this spring, with more to come after a summer of record gas prices — have consumer advocates calling for a windfall profits tax.
“We think that there should be some level of accountability and regulation, because the oil industry has a real impact on our economy and on families' budgets,” says Wenonah Hauter with the Public Citizen Energy & Environment Program. “And this type of profit is just not responsible.”
The Federal Trade Commission is investigating whether oil companies held down capacity to keep prices artificially high after Katrina. But the American petroleum industry is fighting back, taking out full-page newspaper ads explaining it's not price-gouging driving the cost of gasoline, but supply and demand.
“What we're really seeing is the market at work,” says the American Petroleum Institute's Rayola Dougher. “And we're seeing these sort of prices because we had a major disruption in supplies.”