Sept. 21 (Bloomberg) -- Gasoline and crude oil jumped as Hurricane Rita barreled toward the Texas coast, threatening refineries that were spared by Katrina last month.

``The Houston area is ground zero of the refining industry,'' said Rick Mueller, an analyst with Energy Security Analysis Inc. in Tilburg, the Netherlands. ``If it suffers the scope of damage caused to refineries in Louisiana by Katrina, we could see rationing and queues at the gas pump. This is something OPEC can't do anything to remedy.''

Texas is home to the biggest concentration of U.S. refineries, accounting for 26 percent of the nation's total capacity. BP Plc and Valero Energy Corp. are evacuating workers and slowing output at three Houston area refineries. Rita, a Category 4 storm, may hit the Texas coast on Sept. 24. Four refineries in Louisiana and Mississippi, representing 5 percent of U.S. capacity, remain shut because of Katrina.

Gasoline for October delivery surged 7.65 cents, or 3.9 percent, to $2.0531 a gallon on the New York Mercantile Exchange, the highest close since Sept. 6. Gasoline futures reached $2.92 a gallon on Aug. 31, the highest since trading began in 1984. Futures are 59 percent higher than a year ago.

Crude oil for November delivery rose 60 cents, or 0.9 percent, to close at $66.80 a barrel in New York. Futures touched $68.27, the highest since Sept. 2. Oil has declined 5.7 percent since touching a record $70.85 a barrel on Aug. 30. Prices are 42 percent higher than a year ago.

Capacity at Risk

``Between 15 and 20 percent of the nation's refining capacity is at risk from this hurricane,'' said Bill O'Grady, assistant director of market analysis at A.G. Edwards & Sons in St. Louis. ``A Category 3 or above storm is going to down power lines and refiners will lose power. It will take at least 1 1/2 to 2 weeks before they come back.''

If there is flooding the situation would be much worse, O'Grady said.

BP's Texas City refinery, the third-largest in the U.S., is shutting some units and evacuating some employees because of Rita, a company spokesman said. The refinery can process 460,000 barrels of crude oil a day.

Valero, the largest U.S. crude-oil refiner, said that its Texas City and Houston refineries are cutting processing rates to a minimum and preparing for possible shutdowns because of Rita. The two facilities can process a total of 378,000 barrels of crude oil a day.

Deer Park Refinery

Royal Dutch Shell Plc began shutting its Deer Park, Texas, crude-oil refinery, the seventh-largest in the U.S., in anticipation of the storm. The refinery, a joint venture between Shell and Mexico's state oil company, Petroleos Mexicanos, can process 340,000 barrels of crude oil a day, according to the company's Web site.

Texas' 26 refineries have the capacity to process 4.6 million barrels of crude oil a day, according to the Energy Department. Most of the state's refineries are located along the coast in the Corpus Christi, Houston and Port Arthur areas. Louisiana is the second-biggest refining state.

The National Weather Service has issued a flood watch for the Texas coastline, including Galveston, because of Rita. Exxon Mobil Corp.'s Baytown, Texas, oil refinery, the nation's largest, is located along the Houston Ship Channel inland from Galveston. A spokesman said the company was releasing non- essential personnel from the facility.

`Worst-Case Scenario'

``Rita is developing into our worst-case scenario,'' said John Kilduff, vice president of risk management at Fimat USA in New York. ``This is headed right into our other major refining center just after all the damage done to facilities in Louisiana. From an energy perspective it doesn't get any worse.''

BP, Exxon Mobil, Chevron Corp. and ConocoPhillips have evacuated staff from platforms in the Gulf, a region that's responsible for 30 percent of U.S. oil output.

Katrina and Rita have shut 1.1 million barrels, or 73 percent, of daily crude-oil output in the region, according to a report from the U.S. Minerals Management Service, which manages offshore resources. That's almost 15 percentage points worse than yesterday.

``This has the potential to be a real powerful storm, and after the damage caused by Katrina nobody's taking any chances,'' said Justin Fohsz, a broker at Starsupply Petroleum Inc. in Englewood, New Jersey. ``Even if it misses the offshore platforms there will be disruptions due to the evacuations.''

Gaining Strength

Rita today gained force over the Gulf, matching the strength of Katrina when it made landfall. Katrina shut 95 percent of offshore production in the region, closed eight refineries and slowed operations at about 10 others.

Rita's maximum sustained winds accelerated to 150 mph (241 kph) as of 2:15 p.m. local time, the National Hurricane Center in Miami said. A Category 5 storm, the maximum on the Saffir- Simpson scale of intensity, has winds in excess of 155 mph.

``Hurricane paths are like spinning the bottle, you don't know where they're going to hit until about three hours from landfall,'' said Matthew Simmons, chief executive of Simmons & Co., a private investment bank in Houston for the oil and gas industry. ``Anything south of Corpus Christi and we're fine. It could be Pearl Harbor.''

The hurricane's reach may extend anywhere from northeast Mexico along the Texas coast to the western half of Louisiana, according to the center.

Heating Oil

Heating oil for October delivery rose 2.74 cents, or 1.4 percent, to $2.0387 a gallon, the highest since Sept. 6. Futures touched $2.21 on Sept. 1, the highest in 27 years of trading on the exchange. Heating oil is 56 percent higher than a year ago.

Natural gas for October delivery rose 10.2 cents, or 0.8 percent, to $12.594 per million British thermal units. Futures reached $13.24 per million Btu, the highest since the contract was introduced in 1990. Prices have more than doubled in the past year.

The Energy Department's statistical arm, the Energy Information Administration, this month said that consumers using heating oil are likely to spend 31 percent more to heat their homes this winter. Those who heat with natural gas face a 71 percent increase from last year.

``We're one storm away from a big shock to the economy,'' said Neal Soss, an economist at Credit Suisse First Boston in New York. ``The shock to the economy from Katrina was bad enough. We have a very severe dependency on a very limited infrastructure because we really haven't invested enough in refining capacity for a long time.''

No new oil refineries have been built in the U.S. since 1976, in part because of environmental restrictions and local protests against new construction.

OPEC Quotas

The Organization of Petroleum Exporting Countries, which pumps about 40 percent of the world's oil, agreed at its meeting in Vienna yesterday to effectively suspend its quota system for the first time since the 1990 Gulf War. OPEC estimates its members can pump another 2 million barrels a day. The offer of additional barrels starts Oct. 1 and lasts three months.

Consuming nations have a responsibility to invest in refineries and to lower taxes if they want lower fuel prices, OPEC President Sheikh Ahmad Fahd al-Sabah, who is also Kuwait's oil minister, said. Taxes make up 62 percent of fuel prices in the U.K. and 24 percent in the U.S., according to OPEC.

OPEC's own responsibilities are to provide adequate supplies of crude oil and also to invest in building refineries, which several OPEC nations, including Saudi Arabia, are already doing, he said.

Refinery Investments

``There are some real investments that will have to be made on refineries,'' said Sarah Hunt, who helps manage more than $600 million at Capital Management Associates in New York. ``It reinforces something that people have been talking about for a long time, but nobody cares until there is a crisis. Getting a refinery permit is nearly impossible.''

U.S. crude-oil inventories fell 322,000 barrels to 308.1 million barrels last week, according to the Energy Department. An increase of 1 million barrels was expected, according to the median of forecasts by 13 analysts surveyed by Bloomberg.

Stockpiles of gasoline and distillate fuel, a category that includes heating oil and diesel, unexpectedly increased as refineries raised operating rates.

Ignored Report

``The inventory report was bearish but is being ignored,'' Mueller said. ``Rita is all we want to talk about even here thousands of miles from the U.S. The builds in gasoline and distillate could turn negative real quickly if refineries are down as a result of Rita.''

Refineries operated at 90.8 percent of capacity, up 3.5 percentage points from the week before. Utilization declined more than 10 percent during the week ended Sept. 2 because of Katrina.

``Margins are great so refineries are operating full out,'' O'Grady said. ``Also, maintenance is being delayed, which is both good and bad. It's good because we need the fuel and bad because the chance of explosions increases when maintenance is put off.''

The profit margin for turning a barrel of crude oil into heating oil and gasoline is $17.327, based on futures prices in New York. That is more than double what would have been earned a year ago.

Gasoline demand rose an average 183,000 barrels a day to 8.8 million barrels a day last week, the report showed. It was the first increase in four weeks.

Pump Prices

Regular-grade gasoline, averaged nationwide, fell 2.4 cents to $2.764 a gallon yesterday, according to data released today by the AAA, the nation's largest motoring organization. Prices have declined 9.6 percent since touching a record $3.057 on Sept. 2. Pump prices are 49 percent higher than a year ago.

In London, the November Brent crude-oil futures contract rose 53 cents, or 0.8 percent, to close at $64.73 a barrel on the International Petroleum Exchange. Prices touched $68.89 on Aug. 30, the highest since trading began in 1988.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.

Last Updated: September 21, 2005 15:45 EDT