Gulf Coast Refinery and Pipeline Capacity Uncertain

A refinery along the Mississippi River is shown in this aerial view Friday.

A refinery along the Mississippi River is shown Friday in this aerial view between Baton Rouge and New Orleans. Reuters hide caption

itoggle caption Reuters

The Bush administration and the International Energy Agency are each releasing millions of barrels of oil and gasoline into the market in coming weeks in an effort to stabilize prices sent soaring by the Hurricane Katrina crisis. But questions remain unresolved over how much long-term damage production facilities have suffered.

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The United States is getting help from other countries as it tries to cope with oil and gas shortfalls after Hurricane Katrina. The International Energy Agency said its member countries will release more than 60 million barrels of oil and gasoline into the market over the next month. The idea is to help stabilize prices. But there still are big questions about how much long-term damage there is to energy production facilities. NPR's Jim Zarroli reports.

JIM ZARROLI reporting:

The IEA's move will put about one million additional barrels of oil and gasoline onto the markets every day. That's in addition to oil the United States is releasing from its reserves. John Kilduff of the energy trading firm FIMAT USA says the move should go a long way toward calming markets that are worried about energy prices.

Mr. JOHN KILDUFF (FIMAT USA): Governments around the world are clearly throwing everything they can at this problem to try to alleviate the price shock that we're going through.

ZARROLI: Hurricane Katrina wiped out about 10 percent of US refining capacity, which is heavily located in the Gulf, and also damaged some of the rigs and pipelines used by oil and gas producers. That sent the price of crude oil, natural gas and gasoline sharply higher this week, and has led to lines at service stations at some parts of the country. In Columbus, Ohio, today, Dave Thomas(ph) was one of the motorists paying 3.19 a gallon for unleaded gasoline.

Mr. DAVE THOMAS: Already planning on getting a second job to pay the bills that I got, but now I'm going to have to get a third job just to buy gas.

ZARROLI: As prices climb, many people are worried about spot shortages. With Labor Day approaching, businesses that depend heavily on travel and tourism are especially vulnerable. Jim Paine(ph), director of marketing for the Richmond Hill Inn in Asheville, North Carolina, says quite a few people canceled their reservations for the weekend.

Mr. JIM PAINE (Richmond Hill Inn): I think it's more not so much the gas price as the fear of the shortage. I think people are afraid they'll get out on the road and not be able to find gas.

ZARROLI: But Paine says many rooms were subsequently rebooked by travelers from the area.

In the wake of today's announcement, gasoline fell more than 9 percent on the spot market, but John Kilduff says consumers aren't out of the woods yet. There are many unanswered questions about the condition of the oil and gas infrastructure in the Gulf.

Mr. KILDUFF: We know Hurricane Ivan last year did tremendous damage to it, and obviously, as we all know, Katrina was a much bigger storm with potentially greater damage.

ZARROLI: Kilduff says if undersea pipelines are damaged, something that happened during Ivan, prices could begin to climb again pretty quickly. Jim Zarroli, NPR News.

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