Floodwaters could threaten refineries

People look on as water from the rising Mississippi River is released through the Bonnet Carre Spillway May 9, 2011 in Norco, La.

Jeremy Hobson: The water is slowly receding in Memphis after a crest of almost 48 feet yesterday -- just shy of a record. Now, the focus shifts down the Mississippi river -- where the federal government is opening spillways to reduce the threat to places like Baton Rouge and New Orleans. Meanwhile gasoline futures have been rising this week right along with the floodwaters.

From the Marketplace Sustainability Desk, Sarah Gardner explains the connection.


Sarah Gardner: The flooding has already wreaked havoc in Tennessee, Arkansas and Mississippi. Louisiana is next. And that could mean trouble for U.S. oil refineries. Industry consultant Andy Lipow:

Andy Lipow: Between Baton Rouge and New Orleans, there are 11 refineries.

And they handle 13 percent of U.S. fuel production. Fears that flooding could curtail or even shut them down is pushing gasoline futures higher. Lipow says high waters may slow down river barges and tankers.

Lipow: And that may result in a reduction of crude processing, although refinery shutdown is quite unlikely.

That's because levees appear strong enough to hold back the floodwaters. Analyst Bob van der Valk says he's more worried about hurricane season.

Bob van der Valk: And these hurricanes are anticipated to hit these refineries this year. It'll be an instant replay of Katrina and Rita.

Katrina shut down 10 percent of U.S. refinery capacity for several months.

I'm Sarah Gardner for Marketplace.

About the author

Sarah Gardner is a reporter on the Marketplace sustainability desk covering sustainability news spots and features.

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