Sept. 24 (Bloomberg) -- Hurricane Rita swept ashore in Louisiana, just east of the Texas border, with sustained winds of 120 miles per hour, pushing a storm surge as high as 20 feet into coastal communities.

Rita's center struck land at about 2:30 a.m., 5 miles east of Sabine Pass on the state border, Colin McAdie, a meteorologist at the U.S. National Hurricane Center, said in a telephone interview from Miami. The storm was near Port Arthur, Texas, at 4 a.m. local time and was moving northwest at 12 mph (19 kph.)

As many as 3 million people in the two states were ordered to flee the storm's path, jamming highways out of Houston. While insurance companies may face claims as high as $18 billion, according to storm modeler Eqecat Inc., the oil-refining centers around Houston and Galveston were spared the worst of Rita's damage. Crude and gasoline prices fell yesterday.

``Anything that's sticking out of the surface of the earth is going to be hammered by these winds,'' Lieutenant Dave Roberts, a meteorologist at the Hurricane Center, said today in a telephone interview. ``The major problem is going to be the storm surge. We're going to see major flooding, pretty close to what we had with Katrina.''

Hurricane Katrina slammed into Louisiana on Aug. 29, submerging New Orleans and flattening towns including Biloxi and Gulfport, Mississippi. The storm killed more than 1,000 people in those states and Alabama and Florida, and led to insured damage as high as $60 billion, the costliest U.S. natural disaster.

Storm Surge

Louisiana's Cameron and Jackson parishes and the area around Port Arthur will probably bear the brunt of Rita's storm surge, forecast by the Hurricane Center to exceed 15 feet (5 meters), reaching 20 feet at the heads of rivers and bays, Roberts said.

Rita, at one point a maximum Category 5 storm on the Saffir- Simpson scale, is still a ``dangerous'' Category 3 storm, the center said. The hurricane-force winds, defined as at least 74 mph, stretch 85 miles (137 kilometers) from Rita's eye and are battering a swathe of coastal Texas and Louisiana, with the power to damage buildings, destroy mobile homes and blow down trees.

Storm damage led to fires in buildings in Galveston and Houston, Cable News Network footage showed.

The hurricane's rain yesterday led to breaches in New Orleans's patched-up levees, causing waist-deep flooding in the 9th Ward district. Loss of life in New Orleans wasn't a danger because the city was evacuated after Hurricane Katrina. Still, the floods are bad for morale, said Sergeant Nicholas Stahl of the Louisiana Office of Homeland Security and Emergency Preparedness.

New Orleans Floods

``The waters have been coming back into the city, so we're going to have to fix the levees again and start pumping,'' Stahl said in a telephone interview from Baton Rouge, Louisiana. ``We're back to where we started as far as the cleanup goes.''

Gasoline and oil fell yesterday as Rita veered away from production centers near Houston and Galveston that account for about 12 percent of U.S. refining capacity. Gasoline for October delivery closed down 5.38 cents, or 2.5 percent, at $2.0856 a gallon on the New York Mercantile Exchange. That's still an increase of 7 percent for the week.

Crude oil for November delivery was down $2.31, or 3.5 percent, to $64.19 a barrel on the Nymex, leaving the price up 1.9 percent on the week. Both gasoline and oil touched records at the end of August after Katrina's passage.

Texas Path

The storm is forecast to move inland over southeastern Texas today, taking it past Beaumont and Port Arthur in Texas, where oil companies including Valero Energy Corp., have refineries. As Rita slows down over land, more than 25 inches (64 centimeters) of rainfall is forecast by the hurricane center in areas of eastern Texas and western Louisiana.

``The coastal plain by the state border is fairly shallow, and when that much water comes down, it creates real flooding,'' David Vaughan, a spokesman for the Texas Emergency Operations Center, said today in a telephone interview from Austin. ``The closer towns are to the coast, the more water they're going to get flowing into them from upriver,'' he said, identifying the Sabine and Trinity rivers as likely to flood.

``Beaumont in particular is very low, just above sea level,'' Vaughan said. ``There are a lot of petrochemical plants, a lot of refineries in that area, and we're particularly concerned about them.''

Evacuation orders in Texas and Louisiana created gridlock on highways yesterday and caused Rita's first indirect casualties when a bus carrying elderly evacuees burst into flames outside Dallas yesterday, killing 24 passengers.

``All our roads have cleared up substantially, and people are ready to bunker in and let the storm pass,'' said Randall Dillard, a spokesman at the Texas Department of Transportation. ``At this point, it's better to be off the road and find shelter.''

To contact the reporter on this story: Alex Morales in London at amorales2@bloomberg.net.

Last Updated: September 24, 2005 06:35 EDT