Hurricane Ike hits heart of U.S. oil sector

Oil companies scrambled to assess damage to refineries and offshore platforms in the storm's wake, while the White House said it would clamp down on gasoline price gouging, ease environmental fuel regulations, and consider releasing emergency stockpiles to ease the impact on drivers.

"The Department of Energy, the Federal Trade Commission and, I know, state authorities will be monitoring gasoline prices to make sure consumers are not being gouged," U.S. President George W. Bush said.

About a quarter of the nation's energy production remained idled in the storm's wake, the largest disruption to U.S. energy supplies since hurricanes Katrina and Rita destroyed offshore oil platforms and flooded refineries in 2005.

The severe hit to production triggered a spike in U.S. average gasoline prices on Saturday of more than 5 cents to $3.73 a gallon, according to the AAA's daily survey of more than 100,000 service stations.

"I think American consumers need to brace themselves for the possible return of $4 a gallon gasoline over the next few weeks," said AAA spokesman Geoff Sundstrom.

Some 14 refineries in Texas were shut due to the effects of Ike, while one in Louisiana was shut in a slow recovery from Hurricane Gustav earlier in the month. Together, the refineries account for 23 percent of the nation's fuel production capacity.

As strong winds continued to batter Houston, Exxon Mobil and Valero Energy Corp said they were returning crews to their shuttered refineries to assess damage.

A spokesman for the joint operations of southeast Texas emergency management agencies said the state's refineries appeared to have escaped the kind of heavy flooding that left plants shut for months after the 2005 hurricanes.

Concerns about Ike boosted oil prices 31 cents to $101.18 a barrel on Friday. The New York Mercantile Exchange said it would reopen several hours early on Sunday at 9:30 a.m. EDT (1330 GMT) due to increased trader interest around the storm.

OFFSHORE PRODUCTION SHUT

The U.S. Energy Department said 2,602,045 customers were without electricity as of Saturday morning, including 2,383,062 in Texas and 218,983 in Louisiana. Valero said its refineries in Houston, Texas City and Port Arthur had no electricity.

Ike also halted shipping and port operations along the Texas coast and led to the shutdown of several pipelines delivering fuel to the East Coast and Midwest.

Offshore, oil companies shut nearly 100 percent of their Gulf of Mexico oil production and more than 98 percent of their natural gas output, according to the latest data from the Minerals Management Service.

Production from the region, home to a quarter of U.S. crude oil output, was expected to recover fairly quickly as Ike had veered just south and west enough to reduce the risk of damage to platforms, experts said.

That production, however, has been hobbled for most of the past two weeks by threats from hurricanes, cutting a cumulative 18 million barrels of oil output.

The U.S. Energy Department said on Saturday that it was in touch with the International Energy Agency on whether to release emergency oil supplies due to disruptions caused by hurricanes Ike and Gustav.