Economic damage from Ike may be less than feared

A small change in Hurricane Ike's course just before it crashed into the Texas coast Saturday may have spared the state and the nation from significantly worse economic damage.

The center of the storm appeared to miss the vital concentration of oil and petrochemical refineries in the Houston area, and the surge of water rolling into the nation's second-largest port was also weaker than predicted.

"If the eye of that storm had been as much as 20 miles east, we would have a lot more havoc and damage than we did," said Chris Johnson, a senior vice president at commercial property insurer FM Global.

Much of the region's industrial recovery will depend on how quickly power companies can restore electricity; that, in turn, will depend on how quickly the utilities can get employees back to work.

Gas prices leaped overnight throughout the East Coast -- to nearly $5 a gallon in some places -- because much of its fuel comes via pipeline from the Gulf Coast, where wholesale prices had been climbing in recent days. Motorists are likely to pay more for weeks, or until the power can be restored to big refineries in Louisiana and Texas.

Moreover, workers whose skills are needed to kick-start the local economy are busy dealing with personal hardships.

"I received a call from one of my employees, who was evacuated to San Antonio. He was just informed that his house was totally destroyed," said Bill Reid, the chief executive officer of Ohmstede, which builds and repairs refineries.

Reid, who lives in Kemah, Texas, about 35 miles south of Houston, said his town was without power and water, and still had 15 feet of flooding.

The region's tourism industry also took a blow, as Ike pummeled the popular barrier island town of Galveston. A nightclub -- perched on a pier over Galveston Bay -- that once featured Frank Sinatra and Bob Hope was reduced to sticks.

On the mainland, the storm's effect on businesses looked much milder than its toll on individuals. A huge number of homes were destroyed, roads were impassable and there was no electricity or water service for thousands as of Saturday evening. It may take days to determine how many people were killed by Ike.

The port of Houston, the nation's second-largest, was without power Saturday but expects to reopen Monday morning if power is restored and the Coast Guard finds no obstacles in the shipping lanes. Some empty cargo containers were blown about, but not too far.

"All the terminals did very well and we had only very minor damage, like fencing being blown down," said port spokeswoman Argentina James.

Wal-Mart Stores Inc. reopened seven stores near Corpus Christi on Saturday. Another 130 stores remained closed, said Greg Rossiter, a company spokesman.

Office buildings in downtown Houston were damaged, but it could have been worse.

"It appears that, at least from our facility and operations standpoint, the impact is a little less than we did anticipate," said Mike Smid, chief executive of trucking company YRC North America, which runs Yellow and Roadway lines. The company evacuated its 900 employees ahead of the storm.

Preliminary estimates put the damage at $8 billion or more, but a precise accounting of the storm's wrath was far from complete.

"It will be some time before we have any damage estimates," said Mike Siemienas, a spokesman for Allstate Corp.

Last week, Risk Management Solutions Inc. revised its initial industry loss estimate for Gustav, now ranging from $2.5 billion to $4.5 billion, down from an estimated range between $4 billion and $10 billion in damage.

Shell Oil said Saturday that crews would fly over oil rigs in the Gulf of Mexico over the weekend to assess damage. The U.S. subsidiary of Royal Dutch Shell PLC said it could take days to weeks before full production could resume at its facilities.

Valero Energy Corp. spokesman Bill Day said crews would soon get in to inspect refineries in Houston and Texas City, which remained shut down. Both, plus another refinery in Port Arthur, lost power in the storm, he said.

Windows were ripped out of office buildings in downtown Houston. At the 75-story JPMorganChase tower, the tallest building in Texas, curtains could be seen flapping in the breeze and glass shards littered the streets below.

Power was out in much of Houston, although the lights stayed on in the city's huge medical center, a sprawling complex with about a dozen hospitals that attract patients from around the world.

Flights in and out of Houston's two major airports were suspended on Friday and not likely to resume until Sunday. Southwest Airlines shut down flights at Dallas Love Field, its home airport, for several hours Saturday as Dallas -- 240 miles north of Houston -- was expected to take a glancing blow from Ike.

Air service to smaller cities in Texas, including Corpus Christi and Harlingen, was also disrupted.

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AP Business Writers David Koenig reported from Dallas, with Ellen Simon in New York. Mark Williams in Bryan, Texas, and John Porretto in Houston contributed to this report.