Sept. 24 (Bloomberg) -- Hurricane Rita slowed as it passed across the Texas-Louisiana border, sparing the U.S. Gulf Coast region from New Orleans to Houston the devastation initially forecast and instead knocking down billboards and trees, disrupting power to hundreds of thousands and some flooding.

Rita's winds diminished to 100 mph (161 kph) as the storm hovered midway between Jasper and Beaumont, Texas, as of 7 a.m. local time, the National Hurricane Center said. The hurricane struck land with winds of 120 mph at about 2:30 a.m. local time about 5 miles (8 kilometers) east of Sabine Pass, Louisiana, just east of the state boundary of Texas.

While insurance companies may face claims of $9 billion to $18 billion, according to storm modeler Eqecat Inc., the oil- refining centers around Houston and Galveston in Texas were spared the worst of Rita's damage. Houston Mayor Bill White said while Rita downed branches and knocked out power, many bayous didn't look much higher than usual.

``The assessment so far is Houston is weathering the storm,'' White said during a press conference today.

The storm's hurricane-force winds stretch 85 miles from Rita's eye and are battering a swathe of Texas and Louisiana, with the power to damage buildings, destroy mobile homes and blow down trees. Tropical storm-force winds of at least 39 mph stretch 205 miles out.

As many as 3 million people in Texas and Louisiana were ordered to evacuate ahead of the storm. Rita may cause coastal storm-surge flooding of as much as 20 feet, which should begin to subside later today, and is forecast to dump as much as 25 inches of rain over parts of eastern Texas and western Louisiana.

`Major Flooding'

``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.''

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.

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, reaching 20 feet at the heads of rivers and bays, Roberts said.

Fairly Shallow Coastal Plain

``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. He said the closer towns are to the coast, the more likely they are to get flooding from the Sabine and Trinity rivers.

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. Those facilities on the waterways near eastern Texas and Louisiana account for about 7 percent of U.S. refining capacity.

U.S. Senator Kay Bailey Hutchinson of Texas told CNN Rita caused the worst damage to Beaumont and Port Arthur. Hutchinson said officials were worried about flooding at the Port Arthur refineries. In downtown Beaumont, the storm blew out windows and several buildings were partially destroyed. Trees and power lines were down, but no major flooding was immediately evident.

``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.''

Houston

In Houston, White said calls for police service were below normal. Storm damage led to fires in buildings in Galveston, and Houston, televised images showed.

Rita, which two days ago was a maximum Category 5 storm on the Saffir-Simpson scale of intensity, was moving northwest at 12 mph, according to the latest hurricane center advisory. The storm was forecast to slow down and gradually head north. Category 2 storms have winds between 96 and 110 mph; Category 3 from 111 to 130 mph; and level 5 winds exceed 155 mph.

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 Katrina. Still, the floods are bad for morale, said Sergeant Nicholas Stahl of the Louisiana Office of Homeland Security and Emergency Preparedness.

``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.''

Electricity Out

More than 700,000 people in the two states were without power. About 250,000 of Entergy Corp.'s 370,000 Texas customers lost power, said spokesman Dave Caplan from Beaumont. About 500,000 CenterPoint Energy Inc. customers were without power in central Texas, Dottie Roark, a spokeswoman for the North American Electricity Reliability Council, said today in a telephone interview from Austin.

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 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.

`Wait and See'

Evacuation orders in Texas and Louisiana created gridlock on highways yesterday and caused Rita's first casualties when a bus carrying elderly evacuees burst into flames outside Dallas yesterday, killing 24 passengers. Roads cleared up late yesterday, as officials advised people to find shelter.

Assessment teams will be sent out when day breaks to assess damage caused by Rita, Mary Lenz, spokeswoman for the Texas Division of Emergency Management, said in a telephone interview from Austin.

``At the moment we're in wait-and-see mode,'' Lenz said.

To contact the reporters on this story: Heather Burke in New York at hburke2@bloomberg.net; Alex Morales in London at amorales2@bloomberg.net.

Last Updated: September 24, 2005 10:08 EDT