All prices soaring as Katrina damage unfolds

By Sheila McNulty, Carola Hoyos and Thomas Catan

updated 11:49 a.m. ET Sept. 12, 2005

HOUSTON - Two weeks after Hurricane Katrina slammed into the U.S. Gulf Coast, the scale of the damage to the nation's energy hub is at last becoming clear.

Virtually every part of the energy complex has been affected: six refineries and four natural gas processing plants remain closed, hundreds of rigs and production platforms have been evacuated, almost 800,000 customers are still without power, and the port of Louisiana is still closed to commercial traffic.

"Hurricane Katrina has been the perfect storm for the U.S. energy industry," says Bernard Picchi, an analyst at Foresight Research. "It has touched every aspect of the energy industry, especially refining and natural gas.

For U.S. consumers already smarting from soaring petrol prices, it is unwelcome news. The destruction wrought by the hurricane is expected to raise the price of everything from winter heating to plastic cups.

Pat Furey, senior commodity manager at Ariba, a supplier of spend management software and services, says even the price of his daily cup of coffee has gone up. Deliveries of coffee to Louisiana's port have been disrupted, as have the petroleum by-products used to make the plastic lid and packaging.

"Items people use every day, from plastic bottles to vinyl siding, will be impacted" by the hurricane, Furey says.

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Analysts say up to 10 percent of U.S. refining capacity remains off-line. Six refineries are closed, four of which could be out of action for several weeks or months.

The extent of the damage offshore has yet to be determined. An attempt to inspect underwater pipelines from offshore facilities failed this week when bad weather forced back the boats. However, early indications have alarmed oil traders.

Royal Dutch Shell said on Friday it may not be able to restore output from its Mars field, which accounts for up to 15 percent of Gulf production, until next year. The International Energy Agency, the consuming nations' watchdog, added to gloom by saying that production could take even longer to recover than it did after Hurricane Ivan a year ago.

Ivan knocked out undersea pipelines and stalled oil and gas production from the U.S. Gulf for months. On Friday, Deutsche Bank said the offshore damage from Katrina looked even worse this time around. Initial estimates are that 10 percent of producing platforms sustained material damages.

At its worst, 95 percent of the U.S. Gulf's daily oil production and 88 percent of its natural gas production was shut. By Friday, some 900,000 barrels a day of oil a little more than 60 percent of normal production and 40 percent of natural gas production remained down But the speed of recovery has slowed in the past days.

The U.S. Gulf usually produces almost 30 percent of the U.S.'s oil and a little more than 20 percent of its natural gas.

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