Hurricane Rita Raises Fears of $5 Gas

Hurricane Rita is currently on pace to hit land in Texas between Port Arthur and Corpus Christi. Nearly all of Texas’ oil refining capacity lies in this area. Hurricane Katrina took out about 3.3 million barrels of oil a day, or 20% of the total US refining capacity. The problem is production in the Gulf Coast is about 900,000 barrels less per day than what it was before Hurricane Katrina. If Hurricane Rita continues on its projected path, Texas is projected to lose more than three million barrels a day of refining capacity, further compounding gas supply problems. Analysts are predicting gas prices between $4 and $5 a barrel if Rita is as bad as predicted. Rita could also cause a spike in natural gas prices because much of the nations’ natural gas supply comes from the Texas area.