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Sat, Sep 24, 2005 - Page 12 News List

Rita threatens Texas oil supply

DAMAGE Hurricane Rita could have an even more severe economic impact than Katrina did, largely because of Texas' large number of energy facilities


Travelers queue up at a gas station in Riesel, Texas, on Thursday as evacuees headed north from the Texas coast ahead of Hurricane Rita. Some motorists were left stranded as supplies of gasoline ran short.


Facing a potentially devastating hit from Hurricane Rita, the Houston-area economy ground to a halt on Thursday as more than 4 million residents evacuated the city and other nearby coastal areas on clogged highways, which were made worse by motorists stranded as gasoline ran short.

From Corpus Christi in the south to Port Arthur on the Louisiana border, businesses along the Texas coast -- including everything from large oil refineries and chemical plants to UPS and Wal-Mart -- suspended most operations in the area.

Standing squarely at the heart of the region, Houston, as the US' 4th-largest metropolitan area, accounts for roughly 2 percent of annual economic output, or about US$250 billion, according to Economy.com, a research firm. That is much larger than the US$50 billion in output attributed to New Orleans and US$10 billion from Gulfport, Mississippi.

Depending on how severe it is when it makes landfall, Hurricane Rita could deliver an even greater temporary blow to economic activity than Katrina, largely because of the greater scale of the local economy and the considerably bigger concentration of energy facilities in Texas than in Louisiana and Mississippi.

A major disruption to the nation's strained oil refining and distribution network -- which some experts said could last for weeks -- could send gasoline and other fuel prices soaring.

The hurricane could also wreak significant environmental havoc because the Texas coast is dotted with large petrochemical plants that store large quantities of dangerous chemicals.

But economists said Hurricane Rita was unlikely to cause as much long-term damage as Katrina because the economic infrastructure of Houston and the surrounding area does not appear to be as vulnerable to flooding as New Orleans was.

"It's hard to envision a scenario where Houston is impacted anywhere near as much as New Orleans," said Mark Zandi, Economy.com's chief economist. The normally busy downtown areas of Houston were largely deserted on Thursday after businesses heeded Mayor Bill White's request to send nonessential workers home on Wednesday.

Stores at the sprawling Galleria Shopping Center were closed and were expected to stay that way through the weekend. A few hotels like the Westin, Hyatt and Doubletree said they would remain open.

"Today, it's a ghost town," said Brett Perlman, a consultant and a former Texas state utility regulator. "The entire city is on the road headed out of town. It's a mess."

Despite weakening to Category 4, Rita was still packing winds of 233kph and appeared headed toward the northwest coast of Texas and the western shores of Louisiana. The area is thick with refineries and other chemical plants, many going into a heightened state of alert on Wednesday and spending most of Thursday shutting facilities and evacuating workers.

Dow Chemical, which is just now getting its big plant in St. Charles, Louisiana, back up to speed, had already shut six Texas plants by Thursday afternoon; Dow expected its huge complex in Freeport, the largest chemical production facility it runs anywhere in the world, to be dark as well by dawn yesterday.

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