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Thursday
May122011

Flooding Concerns Impact Oil Refineries in Gulf Coast

Comstock/Thinkstock(NEW ORLEANS) -- The oil industry is watching the Mississippi River flooding closely amid fears that key oil refineries may be disrupted, possibly causing gasoline shortages and price spikes.

About half of the nation's oil refinery capacity is concentrated in the Gulf Coast region, according to the U.S. Energy Information Administration.

Andrew Lipow, president of Lipow Oil Associates in Houston, said only one refinery, run by Alon USA Energy in Krotz Springs, Louisiana, is at risk for flooding in the next seven days.  And that's only if the Army Corps of Engineers decides to open a spillway from the Mississippi River to the Atchafalaya River.

The Mississippi River is expected to crest, or reach its highest level, in New Orleans on May 24, when the refineries could be at most risk, Lipow said.

A spokesman for Alon, Blake Lewis, said operations at Krotz Springs Refinery are "running normally."

"Refinery personnel are continuing to monitor conditions on the Atchafalaya River and will adjust operations, if needed," Lewis said.

Oil prices have been on a rollercoaster ride, mostly in the up direction for the past year. On Wednesday, crude dropped 5.5 percent to below $100 a barrel after a government report showed stockpiles increased as drivers have cut back on trips.  Still, oil is up almost 30 percent from a year ago and any disruption at the refineries is likely to cause another price spike at the pumps.

Lipow said the likelihood that any of the refineries will be flooded is "rather small."  Even when the river crests, he anticipates that the waters will still be held in the river system.

There are 11 refineries along the Mississippi River between New Orleans and Baton Rouge, comprising 13 percent of U.S. output.

Copyright 2011 ABC News Radio

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