Gulf Coast Oil Industry Assesses Damages

Oil and gas fields in the Gulf of Mexico and nearby refineries are an important source of fuel for U.S. energy needs. Energy companies are trying to determine how much damage Hurricane Katrina has done to their pipelines, drilling platforms and refineries.

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Oil and gas companies are still trying to assess how much damage Katrina did to their vast production facilities in the Gulf of Mexico. But the shutdown of numerous refineries and drilling platforms in the region appears likely to send retail gasoline prices sharply higher in the days to come. NPR's Jim Zarroli has that part of the story.

JIM ZARROLI reporting:

There were scattered reports today of damage to some of the oil- and gas-drilling platforms that dot the Gulf. Royal Dutch/Shell said the upper deck of its huge Mars platform, which produces 147,000 barrels of oil a day, had been damaged. Rowan Companies said one of its 22 rigs was missing and may have capsized. The important Colonial Pipeline that runs from Houston to New York is down. But the critical Louisiana Offshore Oil Port, which handles 1.3 million barrels of imported oil each day, appears to be in good shape.

Of more immediate concern is the condition of the many refineries along the Gulf. Nearly all of them are down because of power outages. And some big energy companies began warning their distributors today that they wouldn't be able to provide all the gasoline they need. As a result, the price of unleaded gasoline shot up as much as 25 cents a gallon on the spot market. Mary Welge, an analyst with the Oil Price Information Service, said consumers could see increases of 10 to 30 cents a gallon at the pumps within days.

Ms. MARY WELGE (Oil Price Information Service): The reason I say that is because, obviously, we've got many refineries and pipelines down, and that creates an automatic shortage of product. And yet we've got demand that is still higher than it was last year.

ZARROLI: Whether prices stay high will depend, in part, on whether any lasting damage was done to the refineries, something no one knows yet. Refining capacity is extremely tight in the world right now, and even the loss of one facility for any extended period could send prices even higher. With prices rising, there was growing pressure on the Bush administration to release oil from the Strategic Petroleum Reserve, but that would do little to ease shortages if refineries and pipelines remain offline. Jim Zarroli, NPR News, New York.

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