After Ike, Refined Oil In Short Supply

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Several days after Hurricane Ike descended on the Gulf Coast, there are still more than 1.5 million residential customers without electricity in Texas, and the area's largest utility company said it expects that up to half of its customers still won't have power by next week.

But the lack of power is not only delaying the recovery of schools and businesses. It has also caused problems for Texas' — and the nation's — gasoline supply.

The storm destroyed dozens of offshore drilling rigs in the Gulf of Mexico. But Assistant Energy Secretary Kevin Kolevar said that the problem lies not with the damaged rigs, which represent just a small percentage of the Gulf's total drilling, but rather with 14 oil refineries that shut down operations as Ike approached.

"We're not short of crude oil, we're short of refined product," Kolevar said.

The closed refineries amount to 20 percent of the nation's oil refining capacity, and their disruption has led to price spikes and spot shortages not just in Texas, but as far away as Connecticut and Florida.

Nearly a week after they shut down, many refineries still lack power, and all of them remain closed. According to Kolevar, it will be a week to 10 days before some of the refineries resume operation.

Along the coast, refineries are working as quickly as possible to bring their production units back online. On Wednesday, there was a steady stream of trucks at Valero's Houston refinery, where power was restored and restart operations are under way.

Valero shut down three refineries as the hurricane approached. Company spokesman Bill Day said that although there was little damage from the storm, restarting a refinery still takes time.

"It's not just a simple process of flipping a switch," Day said. "This is something that takes a lot of people with a lot of expertise."

Shell and Exxon said they are also beginning the restart process at some of their Texas refineries. Their best estimate is that it will be weeks before most of the refineries are in service again.

In the meantime, the supply disruption has created a gas shortage in southeast Texas, adding to the frustrations of storm battered residents. Less than half of the gas stations in the Houston area are open, and although many that are open have lines, they are beginning to get shorter.

Nellie Espinoza waited for just half an hour to fuel up on Wednesday. The first time she tried to get gas after the storm, she says she waited four hours before being turned away.

"We've been trying to get gas since then," Espinoza said. "And right now, when I saw the short line, I told my aunt, 'You know what, I'm going to stop and get gas.'"

Following a 20-cent price increase in the days after the storm, the price of gas stabilized Wednesday with a national average of around $3.85. Kolevar said that when gas supplies are pinched like they have been in the past week, gas stations have little choice but to raise prices.

"If they were not to adjust prices up, they could burn through that supply very quickly and actually be down because demand is so high at that time," he said.

Still, attorneys general in several states say they are investigating allegations of price gouging. In some areas, gas prices have been reported at more than $5.



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