Sept. 22 (Bloomberg) -- Gasoline rose for a second day as Hurricane Rita bore down on the Texas coast and the nation's largest concentration of refineries.

``One of the biggest hurricanes ever is headed for the heart of America's refining capacity,'' said Jason Schenker, an economist at Wachovia Corp. in Charlotte. ``Prices will hit new records if we get reports of flooding and other destruction once the storm passes.''

Exxon Mobil Corp., Royal Dutch Shell Plc and Valero Energy Corp. are among the companies that shut plants. Prices pared their gains after Rita was downgraded to a Category 4 storm. The hurricane has maximum sustained winds of 150 mph (241 kph), down from 175 mph earlier today, the National Hurricane Center said in an advisory at 1 p.m. Houston time.

``The storm is still serious but 150 miles per hour is a heck of a lot better that 175,'' said Kyle Cooper, an analyst with Citigroup Inc. in Houston. ``The track has been moving to the east, away from the really big refineries in the Houston area.''

Gasoline for October delivery rose 8.63 cents, or 4.2 percent, to $2.1394 a gallon on the New York Mercantile Exchange, the highest close since Sept. 2. Prices touched $2.92 a gallon on Aug. 31, the highest since trading began in 1984. Futures are 59 percent higher than a year ago. Gasoline had the biggest move of any commodity.

`Record Pump Prices'

``If some refineries are damaged prices will rise higher than they did as a result of Katrina,'' said Phil Flynn, vice president of risk management at Alaron Trading Corp. ``There would be record pump prices, which would eventually go down because demand will fall as the economy falters. There comes a point when people will reduce driving and I think we're close.''

Regular-grade gasoline, averaged nationwide, fell 0.9 cent to $2.755 a gallon yesterday, according to data released today by the AAA, the nation's largest motoring organization. Prices have declined 9.9 percent since touching a record $3.057 on Sept. 2. Pump prices are 48 percent higher than a year ago.

The path of the hurricane has been moved eastward, away from Houston and toward Port Arthur, which is near the Louisiana border.

``The storm track has moved to the east, which is a little bit better,'' said Eugene X. Hodge, a managing director at John Hancock Mutual Life Insurance Co. who manages a $4.3 billion oil and gas company bond portfolio. ``The Port Arthur area is home to about 6 percent of the country's refining capacity. Houston has about double that amount.''

Refineries Shut

Exxon Mobil is shutting its Baytown refinery in Texas, the company said. The Baytown refinery is the biggest in the U.S., processing 557,000 barrels of oil a day. The company said it was also closing its Beaumont refinery, which can process 348,500 barrels a day.

BP Plc said it shut its crude-oil refinery in Texas City, Texas, the nation's fourth-largest, to prepare for Rita. The facility can process 460,000 barrels a day.

``A lot of capital will be invested to increase capacity,'' Hodge said. ``It takes time, a couple of years before the new capacity is up and running. The industry has been doing great for the last few years but has historically been a dog, so no investment was made.''

U.S. House Republican Policy Chairman John Shadegg, along with 32 co-sponsors, yesterday introduced a bill aimed at helping tackle ``the nation's critical shortage in refinery capacity,'' as a second hurricane in less than a month bears down on the Gulf.

Expedite Construction

The proposed legislation, known as the Fuel Supply Improvement Act of 2005, seeks to ``expedite and encourage construction of new and expanded refineries by streamlining permitting processes and providing risk insurance similar to that available to the nuclear energy industry to a limited number of new refineries.''

``There is no margin for error in our energy supply,'' Shadegg, an Arizona Republican, said in a statement on his Web site. ``We were running at 97 percent capacity for refining oil before Katrina hit. We have not built a new refinery in this country in 29 years. America desperately needs more refineries to convert crude oil into the fuels that power our society.''

Heating oil for October delivery rose 0.71 cent, or 0.4 percent, to $2.0458 a gallon. Futures touched $2.21 on Sept. 1, the highest in 27 years of trading on the exchange. Heating oil is 52 percent higher than a year ago.

Natural gas for October delivery rose 19 cents, or 1.5 percent, to $12.79 per million British thermal units, the highest close since trading began in 1990. Prices touched $13.42, an intraday record. Prices have more than doubled in the past year.

`Uncharted Waters'

``We're stepping off into uncharted waters partially in crude but mostly in natural gas,'' said James Glickenhaus, who helps manage $1.2 billion at Glickenhaus & Co. in New York. ``If Rita impacts natural gas, which it looks like it will, it's going to have a big impact on the economy. We're going into the transition between summer cooling season and winter heating season with record prices.''

Consumers using heating oil are likely to spend 31 percent more to heat their homes this winter compared with a year earlier, the Energy Department reported this month. Those who heat with natural gas face a 71 percent increase from last year.

``Rita could put a damper on the Christmas spirit,'' Flynn said. ``People won't shop for gifts when they can't pay their heating bills.''

Oil Falls

Crude oil reversed when the storm was downgraded. Oil for November delivery fell 30 cents, or 0.5 percent, to $66.50 a barrel in New York. Futures have fallen 6.1 percent since touching a record $70.85 a barrel on Aug. 30, the day after Katrina made landfall. Prices are 38 percent higher than a year ago.

In London, the November Brent crude-oil futures contract declined 8 cents to $64.65 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 22, 2005 15:19 EDT