Hurricane Rita and $5 Gas

Hurricane Rita may cause gas prices to spike above $5 a gallon, according to some experts.

Rita could equal $5 gas — The timing and strength of the latest storm could cause worse spike at the pumps than Katrina did. (CNN/Money)

– Remember when gas spiked to $3-plus a gallon after Hurricane Katrina? By this time next week, that could seem like the good old days. Weather and energy experts say that as bad as Hurricane Katrina hit the nation’s supply of gasoline, Hurricane Rita could be worse. Katrina damage was focused on offshore oil platforms and ports. Now the greater risk is to oil-refinery capacity, especially if Rita slams into Houston, Galveston and Port Arthur, Texas. “We could be looking at gasoline lines and $4 gas, maybe even $5 gas, if this thing does the worst it could do,” said energy analyst Peter Beutel of Cameron Hanover. “This storm is in the wrong place. And it’s absolutely at the wrong time,” said Beutel.

Michael Schlacter, chief meteorologist for private weather service Weather 2000, said that it now appears the eye of Rita could come ashore near Port Arthur, Texas, near the Texas-Louisiana border, early Saturday. The forecast from the National Hurricane Center puts the most likely track of the storm a bit further west, coming ashore in near Galveston, Texas. Both areas have big concentrations of refineries. Schlacter warned that Rita is now so large that refineries in both areas would be affected by Rita making landfall at either location. And he said it’s a fair bet that Rita will be even stronger than Hurricane Katrina was when it hit most of the oil facilities in Louisiana and Mississippi. “It’s splitting hairs as to where the eye is coming ashore,” he said. “Anywhere within 60 miles of the eye will get clobbered.”

Offshore oil rigs and platforms, even some of them further east off the Louisiana Gulf Coast, are also at risk from the heavy surf being kicked up by the storm as it moves through the Gulf of Mexico. “She is spending the longest possible time she could spend in the Gulf, and because of that she has days and days to build up momentum and churn up the waters,” he said.

Lovely. One obvious lesson from this mess is that concentrating most of our refining and distribution capacity in one region makes little sense.

FILED UNDER: Economics and Business, Natural Disasters
James Joyner
About James Joyner
James Joyner is a Security Studies professor at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. Herb says:

    You are absolutely correct that the concentration of refinery’s in one locale make no sense at all. What makes even less sense is that the Gulf refinery’s don’t seem to be to well protected. It also makes no sense that we don’t have refinery’s more in inland locations. What makes no sense in any way is that we as Americans let a very vocal and sometimes destructive groups of environmental wackos dictate to Americans on a matter of National Defense with gasoline refinery’s. We as a nation must get a lot smarter and have the wackos put into their place. While there is a need to protect our environment, we now know that their extreme thoughts and ideas about the environment have no place in our society and not only threaten our economy, but our national defense as well.

  2. Steve Verdon says:

    Especially when that region is prone to things like hurricanes.

    Of course, expecting nothing to be done.

  3. Tom says:

    This isn’t going to surprise me at all. Kind of scary, in a way, that we’ll quickly get really really close to what people in other countries are paying for gasoline – countries where everyone drives a 2-door hatchback, on the whole.

  4. ken says:

    Herb, where is your evidence that any refinery was not built due to environmental restrictions? As I recall, gasoline prices where down to less than a dollar a gallon not too many years ago and refineries were actually being schedualed for shut downs. The fact that we had an abundance of cheap gasoline is what led to the phenominal growth in the sale of gas guzzling vehicles over the last two decades.

  5. Herb says:

    Ken:

    And where is your evidence on the environmental disaster you keep preaching about, and where is your evidence on the Bush administration? It is strange indeed that you want evidence but when it’s time for you to present evidence, you cite some left wing loony source that is known for outright lies and distortion’s. Take your request to someone some other lefty wacko but don’t look for me to supply you with anything. You do not have the capacity to absorb it or to utilize it when it is disseminated to you. Your comeback to anything I inform of will be a diatribe of names, misinformation, and offbeat references to some misfit source that would do or say anything to destroy our economy and society. And Ken, I will always be around to fight guys like you who have a penchant for the destruction of our country.

  6. ken says:

    Is Herb off his medicine again? Or is that normal for him?

    Either way Herb, you are the kind of person that drives those who love and respect America and care about our future away from wacky Republicanism and into the Democratic party. Keep it up pal.

    Or if and when you regain your sanity plese name one planned refinery that waa never built due to environmental laws. Perhaps the fact that you can’t is what is driving you nuts?

  7. Beldar says:

    You probably understand, Dr. Joyner, that the concentration is the result of historical convenience. Supply was much more preponderant in Texas in days past than it is now, of course, and the cluster of refineries and related petrochemical plants (e.g., for making synthetic rubber/plastics) began as crash projects in the pre- and early-WWII days. (The problem with concentration then was less hurricanes than German submarine wolfpacks sweeping the Texas Gulf Coast trying to pinch off England’s aviation fuel supply.)

    Most of the refinery expansion and improvements has been at plants in this area that have been grandfathered in, or at least exempt from NIMBY battles. Improvements in efficiency of “existing” plants has basically kept up with domestic demand. So I’d be surprised if one could point to a specific plan or proposal for new refineries elsewhere that had been started, gotten very far, and then cancelled due to regulation. But that’s just to say that they’ve been nipped in the bud, or (better metaphor) that the grounds elsewhere were too infertile for such plans to ever take root.

    But if you want to deconcentrate, riddle me this: Are the good folks of California or Florida eager to see the industrial and refinery complexes currently associated with the Texas (and to some extent, Louisiana) Gulf Coast spring up within their borders? I don’t think so.

  8. Scott in CA says:

    It’s even more annoying to see graphics of offshore oil wells and platforms dotted from Texas through Louisiana, Mississippi, and Alabama. Twenty-eight percent of our oil capacity. But when you get to the Florida line, no oil wells! Thanks, environmentalists! They just discovered a big new undersea field off the west coast of Cuba. We know there is probably as much oil off Florida as off Lousiana, but we are fobidden from looking. Same for coastal Southern California. I’m sorry, but we just can’t afford this hippy shit anymore. Drill.

  9. Herb says:

    Thats OK Ken, just keep up with your anti American rhetoric and go your selfish one sided way. You have got to be a YUPPIE that is only interested in having everything your way no matter who it hurts others. That is GREED and it sounds like you are at the top of the GREED list.
    You spout off with so much Anti American comments that by now most everyone knows precisely who and what you really are.

    It is just to bad that your “My way or the highway” attitude shows up so well.

    Just in case you are interested, I watched an interview on Fox News a few days ago when a company spokesman told Fox News that he has been trying to build a refinery for 10 years now and expects to have it completed in another 5 years, all due to environmental regulations.

    Hope you EV wackos are happy

  10. Kent says:

    However much we scream about them, the price spikes from hurricanes are relatively brief. Perhaps the costs of such spikes are more than offset by economies of concentration that are not at once obvious. I don’t know the industry and can’t say for sure.

    Of course, if we really are in a bad part of the hurricane cycle, so that the refinery concentration gets hit more often than earlier in the cycle, we might do well to disperse the refineries.

  11. KevinM says:

    I second Beldar.

    Most people smell a refinery and think…
    IT SMELLS!

    In TX and LA we smell a refinery and think…
    IT SMELLS LIKE MONEY!!

  12. ken says:

    Just in case you are interested, I watched an interview on Fox News a few days ago when a company spokesman told Fox News that he has been trying to build a refinery for 10 years now and expects to have it completed in another 5 years, all due to environmental regulations.

    Since environmental regulations regarding refineries haven’t changed in fifteen years the company must not have wanted to build that refinery very badly. Either that or your just making it all up. I follow this stuff pretty closely and no new refinery has even come close to being seriously proposed for as long as I can remember. In fact with gasoline prices at less than a dollar a gallon not too long many smart companies where schedualing refineries to close. Gasoline was glutting the market.