Gas prices have soared in the aftermath of hurricane Ike due to damage inflicted on major Gulf Coast refineries. Unleaded regular has risen 17 cents since the storm hit to reach $3.842 a gallon. Money Morning’s William Patalon III says gas shortages from a tough hurricane season are likely to affect much of the Southern US.

Last week’s crude and gasoline inventories dropped more than expected as the effects of Hurricane Gustav resulted in some production disruptions. Gustav, which struck last month, was the fourth-most-destructive storm to hit the United States, causing $20 billion in damages. And then came Hurricane Ike.

Ike made landfall in the Galveston area of the U.S. Gulf Coast on in the pre-dawn hours Saturday (the day I was penning this column) as a Category 2 storm with winds hitting 110 miles per hour.  Ike’s path toward Houston makes it the first storm to hit a major U.S. metropolitan area since Hurricane Katrina eviscerated New Orleans in 2005, Bloomberg News reported.

We won’t know how much direct damage those high winds from Hurricane Ike will cause for several days at least. From the initial reports, the results appear to be devastating.

But the indirect costs are already appearing.

At least 13 Texas refineries shut down as Ike approached, the equivalent of more than 19% of the nation’s oil-refining capacity, Bloomberg said. That will certainly limit fuel deliveries across the country in the days and weeks to come – a reality that will likely result in higher gasoline and energy prices.W

The Gulf Coast refineries and ports are the source of about 50% of the oil and gasoline used in the eastern half of the U.S. market. Refineries operated by Exxon Mobil Corp. (NYSE:XOM), Valero Energy Corp. (NYSE:VLO), ConocoPhillips (NYSE:COP), and Royal Dutch Shell PLC (ADR: RDS.A, RDS.B) were affected.

The bottom line: Gasoline shortages may occur across the southern United States and up to Washington because of the production losses caused first by Hurricane Gustav and now by Hurricane Ike, a U.S. Energy Department official told journalists on a conference call Friday.

“We expect to see constrained supplies of refined products,” said Kevin Kolevar, the Energy Department’s assistant secretary for electricity delivery and energy reliability. “The administration will utilize every tool at our disposal to lessen the likelihood of limited fuel supplies,” including tapping the Strategic Petroleum Reserve.

In the days to come, traders will monitor the situation closely as operators assess the damage (in both equipment loss and duration). Now that Labor Day has passed, many so-called ‘experts’ expect the demand for gasoline to weaken as the peak vacation period ends and most kids have returned to school, another catalyst for low energy prices (if only the Atlantic hurricane season would cooperate).

Source: Hurricane Ike is the Latest Wild Card in the “Guess the Gasoline Price Game”