If three bucks a gallon in Houston shocked you, get ready for this. Katrina took a chunk out of America's oil production, but the country's biggest refineries were spared; they're in Texas, and now Hurricane Rita's on its way, potentially to finish the job Katrina left undone.
Phil Flynn says, "This could be the worst storm we have ever seen when we talk about the potential damage and the potential price ramifications when it comes to the oil industry."
Oil watchers say look for new record high's when you go the gas station. Here's why: this is the country's biggest refinery, Exxon Mobil's Baytown.
It refines half a million barrels of oil a day. It's between Houston and Galveston; it may be right in Rita's path.
Massive nearby gasoline factories owned by BP and Shell have already been shut down. Depending on what Rita does, 21 refineries could lie in its path accounting for more than a quarter of all the gasoline refined in America.
The fear of those refineries taking a direct hit have some people making predictions no one would have believed a year ago.
Flynn adds, "If Rita makes a direct hit, prices could go to three and a half, four, even $5 a gallon."
That's a worst case scenario. Best case scenario isn't very good, either. Those refineries that have been shut down can't just be turned back on once Rita passes.
Even if they're not damaged, they'll be down for the better part of the next week, and that's if they're not damaged. Rita will hit; that much is certain.
What it hits and how hard it hits will make all the difference.
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