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Old 09-13-2008, 09:34 AM   #1
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Default Hurricane Ike strikes a blow at Texas economy

By ZACHARY WARMBRODT / The Dallas Morning News

North Texas may see a spike in the price of gasoline and supply shortages next week, depending on how hard Hurricane Ike hits Texas Gulf Coast refineries.

Ike has also halted imports and exports at the Port of Houston, air travel to Gulf Coast cities and rail service out of the region. – all critical to the Texas economy.

At an evening news conference, state officials estimated that the economic impact would reach $81 billion – and could creep up to $100 billion over the next 24 hours.

TONY GUTIERREZ/The Associated Press
In Beaumont, retail outlets closed ahead of Ike. This service station off Interstate 10 wrapped its pumps with plastic. "They're calling for almost a tsunami wave of water to go up the Houston Ship Channel," Lt. Gov. David Dewhurst said, citing possible damage to oil rigs and refineries.

"This storm is going to create an enormous financial impact on Texas ... and on the national economy."

Most of North Texas' gasoline supply comes from refineries in the hurricane's path.

As the storm approached this week, at least nine Houston-area refineries evacuated workers and shut down. The nine, including refineries owned by Irving-based Exxon Mobil, BP and Shell, are responsible for refining 2.3 million barrels of oil per day.

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As of Friday, about 13 refineries along the Texas coast had shut down.

The refineries along the Texas Gulf Coast are responsible for about 20 percent of the country's refining capacity. They supply most of the gasoline to the middle third of the country, so the price could rise all the way to Chicago.

Spot prices that traders pay for gasoline, and on which many retailers base their prices, reached unprecedented levels at the end of the workweek, between $4.25 and $5 per gallon Friday afternoon, said Tom Kloza, chief analyst with Oil Price Information Service.

"Gasoline is scarce, and retail prices are going to move sharply higher," Mr. Kloza said. He said he expected price increases across the country, and he said Tennessee and the Carolinas already were seeing spot shortages.

Through September, Mr. Kloza said, the country could see gasoline above $4, long lines and shortages.

In Texas, one respite from high prices may come in the form of a public relations tactic. After Hurricane Katrina, oil companies and refiners avoided large price increases in Louisiana, Mr. Kloza said because they didn't "want to be perceived as opportunistic or callous."

Experts said the effects on price and supply would vary depending on how Ike hits the refineries and the region's infrastructure.

Flooding is a major concern with Ike as most of the refineries are on the water. Ike is expected to have a very large storm surge because of its size.

Even if flooding is not severe, it will take time to move employees back into the area.

Most important, experts said, the extent of damage to the power grid could determine how long refineries stay out of commission.

"If the damage wasn't significant, in a couple of days you can get them back up and running," said Bruce Bullock, director of the Southern Methodist University Maguire Energy Institute.

"That being said, 20 miles or 30 miles one way or the other could make a big difference, and it could make a difference of being down three weeks or four weeks or being down a week."

Tight supply

Supply is already tight.

The U.S. gasoline inventory is about 188 million barrels, nearing the all-time low of 186 million barrels seen during Hurricanes Katrina and Rita, said Dan Pickering, research analyst at Houston-based Tudor Pickering Holt and Co.

As the supply of fuel to North Texas terminals stops, retailers must decide whether to raise prices.

"They're just trying to make sure they're with the market," said Bill Douglass, chief executive of Sherman-based Douglass Distributing. "I think most retailers have it figured out if they're the lowest price in town, they'll run out of gas."

Douglass Distributing, which supplies gas to 150 stations and runs 15 of its own, started to raise its retail price on Thursday. It expects to raise prices more as the market moves – to avoid losing money and running out of gas.

"If you don't have fuel in your tank, you're not using the best judgment," Mr. Douglass said.

The Texas attorney general's office said Friday that it had received about two dozen complaints of price gouging at gasoline stations, but nothing excessive.


Meanwhile, other aspects of Texas infrastructure are facing shutdowns and slowdowns. The Port of Houston plans to shut down its cargo operations during the weekend, and air and rail travel out of the area are on hold.

Wal-Mart Stores Inc., the largest U.S. retailer, and Home Depot Inc., the second-largest, have major import facilities in Baytown.

Wal-Mart's emergency management team senior operations manager, Bryan Koon, said Ike has been on the company's radar for at least two weeks. Wal-Mart has diverted shipments to Los Angeles and Savannah, Ga., and some boats are holding at sea until the storm passes. This week, containers in port were moved to safer ground, he said.

Wal-Mart has more stores in Texas than any other state. Friday, it closed about 120 stores in areas expected to get hurricane-force winds. About 200 to 210 stores could be hit with tropical-storm winds and be exposed to power outages and flooding, Mr. Koon said.

Home Depot's import distribution center in Baytown is also closed. It moved shipments to other ports, said spokeswoman Sarah Molinari.

Texas stores were stocked with extra plywood, tarps, batteries, flashlights, gas cans and bottled water ahead of time. It closed 50 stores on Friday.

Now, about 300 Home Depot trucks filled with post-storm cleanup supplies ranging from buckets to generators are standing by in San Antonio.

"We keep those trucks close enough to get into the affected area, but out of the storm's way," she said.

Air travel

Dallas-based Southwest Airlines Co., American Airlines and other airlines canceled flights to Houston and Corpus Christi.

Fort Worth-based Burlington Northern Santa Fe Railroad closed its Houston and Galveston operations Thursday, and it removed equipment from the areas expected to be hit by Ike.

Union Pacific Railroad removed 4,000 rail cars and 200 locomotives from areas expected to be affected by the hurricane.

But all is not bleak for the North Texas economy. Hotel occupancy has surged as evacuees look for a place to stay. Gov. Rick Perry suspended the hotel tax as evacuees arrived, and many hotels offered discounts.

Most evacuees have sought shelter in economy hotels, which are filling up quickly and seeing occupancy rates 15 percent to 30 percent higher than usual for September, said Brooke Deiterlen, executive director of the Hotel Association of Greater Dallas.

Staff writers Brendan M. Case, Maria Halkias, Dave Michaels and Emily Ramshaw contributed to this report.

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Old 09-14-2008, 04:00 PM   #2
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Default Re: Hurricane Ike strikes a blow at Texas economy

This is much like Katrina only worse due to the damage to the oil industry. It will have a devestating financial impact on the US economy.
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Old 09-14-2008, 05:17 PM   #3
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Default Re: Hurricane Ike strikes a blow at Texas economy

Please check out this, then check the markets ie http://www.urbansurvival.com/week.htm and other similar sites. Money is involved yet again....
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