After shutting down nearly all oil production in the Gulf of Mexico and halting operations at refineries along the coast, energy companies could only brace for impact Tuesday as Hurricane Isaac rumbled toward Louisiana.
With 1.1 million barrels of oil refining capacity offline or being shut down Tuesday, and with other facilities scaling back operations, the possibility of an extended interruption in the production of gasoline and other petroleum products briefly spooked traders.
"It just depends how big an outage and how long," said Joseph Stanislaw, a senior energy adviser for Deloitte.
An extended shutdown of Gulf refineries could cause a gasoline shortage in some areas and push pump prices up.
But market anxiety seemed to calm down Tuesday after futures prices spiked a day earlier. Gasoline futures settled at $3.1261, down about 3 cents a gallon, in New York Mercantile Exchange trading. Retail prices in Houston averaged $3.56 for a gallon of regular Tuesday, up 1 cent from Monday, AAA reported.
Still, observers could only guess at the effects Isaac might have as it crawled closer to the coastline.
"We'll see what happens as the hurricane makes landfall," said Andrew Lipow, president of Lipow Oil Associates in Houston.
Heavy rain, or damage to roads and other infrastructure, could hamper efforts to get refineries up and running, he said.
"You have to get the personnel returned, and the biggest issues are going to be flooding and power," Lipow said.
The storm's effects extended well inland. Valero, North America's largest independent refiner, cut production at its 195,000-barrel-per-day refinery in Memphis, Tenn., after Shell Oil Co. closed a pipeline that carries crude to the refinery from the Gulf Coast, Valero spokesman Bill Day said.
It was one of four pipelines Shell shut down because of Isaac. And Shell cut production at refineries in Convent, La., and Geismar, La., that it jointly owns with Motiva, the company said.
Exxon Mobil Corp. added to the refining cutbacks, shutting down a facility in Chalmette, La., and cutting production in Baton Rouge, La., where it has its largest refinery.
Valero, Marathon and Phillips 66, among others, announced other refining outages and reductions on Monday.
The Gulf Coast contains more than 40 percent of the nation's petroleum refining capacity, with 16 percent of it in areas near the storm, Lipow said.
That accounts for about 6 percent of the nation's gasoline capacity, along with facilities that make about 10 percent of the country's jet fuel, he said.
More than 93 percent of Gulf oil production was shut in as of Tuesday, taking 1.3 million barrels a day of production offline, according to the U.S. Bureau of Safety and Environmental Enforcement. Producers also shut in about more than 3 trillion cubic feet of daily natural gas production in the Gulf.
Companies evacuated hundreds of offshore workers, clearing most crew members from 49 rigs and 503 platforms.
The Gulf shutdowns generated speculation about a government release of oil supplies from the Strategic Petroleum Reserve, with White House spokesman Jay Carney saying Tuesday that it was a possibility.
But Stanislaw said there is no immediate oil shortage.
Besides, noted John Felmy, chief economist for the industry-backed American Petroleum Institute, "If refineries are shut down, why would you need it?"
Crude oil rose 86 cents Tuesday to $96.07 a barrel in New York trading.
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