HOUSTON - If you think gasoline prices are high now, consider the eye-popping possibilities if another monster storm pummels the Gulf of Mexico this hurricane season, the way Katrina and Rita battered the petroleum-rich waters in 2005.

The petroleum industry has spent nearly two years trying to repair the damage from those historic Gulf hurricanes, rebuilding the complex web of platforms, pipelines and refineries in a region that produces roughly 25 percent of the nation’s oil and 15 percent of its natural gas.

The National Oceanic and Atmospheric Administration said this week it expects a busy hurricane season, forecasting 13 to 17 tropical storms, up to 10 of which could become hurricanes. That’s higher than the 10 or so storms and hurricanes that form in an average year.

Already this spring, gasoline prices have climbed even higher than post-Katrina-and-Rita prices. Analysts say prices are certain to shoot higher $4 a gallon, perhaps if and when the season’s first storm enters the Gulf of Mexico.

The average U.S. retail price of unleaded, regular gasoline hit an all-time high of $3.227 a gallon on Thursday, AAA reported. That’s closing in on the inflation-adjusted peak of $3.29 a gallon in March 1981, according to the U.S. Energy Department.

As they prepared to fix the Gulf’s devastated oil and gas facilities, industry representatives realized standard repairs weren’t enough. So the companies that own the platforms, drill the wells and manage the pipelines have spent hundreds of millions of dollars to improve and strengthen their operations. Moorings are stronger, pipelines deeper, backup power in greater supply.

When the 2007 hurricane season begins June 1 after a much-needed mild 2006 season many companies that work in the Gulf oil patch say they’ve prepared as best they can for whatever Mother Nature has in store.

“I think it’s important to say, ‘as best we can be,’” said Frank Glaviano, vice president of production for Shell Exploration and Production, an arm of Royal Dutch Shell PLC. “We thought we were prepared, and then we saw a storm like never before in terms of Katrina. … Rita and Katrina are now part of what can happen not a possibility, but a probability.”

Those storms destroyed 113 of the Gulf’s 4,000 oil and gas platforms and damaged 52 others. The Minerals Management Service, a division of the U.S. Interior Department that manages offshore leases, says the “vast majority” of production from two years ago has resumed, but it didn’t have precise figures.

Katrina provided one of its biggest blows to Shell’s enormous Mars production platform, the Gulf’s most prolific producer. The storm’s 175-mph winds and 75-foot waves broke the steel clamps that attached the 1,500-ton rig structure to the platform and knocked a 200-foot derrick into the water. The surge caused the rig to rise up and slam into the platform, causing heavy damage.

The rig is now held on to the primary structure with clamps Shell says are four times stronger than the ones previously used. The platform resumed operation in May 2006 and is currently producing 190,000 barrels of oil equivalent a day, 20 percent more than pre-Katrina levels.

“We’ve closed the book on Katrina, but we took a lot of learnings forward,” Glaviano said.

Shell wasn’t alone. In fact, soon after the 2005 storms, a number of industry players Shell, Chevron Corp., MMS officials and the American Petroleum Institute, among them began looking at ways to protect themselves against such disasters and minimize the damage and subsequent supply disruptions that contribute to spiking gasoline prices.

One of the key conclusions was the need for stronger mooring systems that anchor rigs to the sea floor, sometimes in thousands of feet of water. That’s prompted major rig owners like Transocean Inc. and Noble Drilling Inc. to increase the number of anchor lines from eight or nine to 12 in some cases.

One of Transocean’s moored rigs, the Marianas, broke free during Hurricane Rita in September 2005 and drifted 140 miles. Another, the Deepwater Nautilus, was set adrift a month earlier by Katrina.

Such unscheduled voyages can be costly. Besides lost revenue, Transocean spent $25 million to fix and upgrade the two rigs, both of which now have 12-point mooring systems.

Noble, whose rig fleet also was damaged in the storms, said it’s spending as much as $30 million apiece to upgrade the moorings on six deepwater rigs. The company also has added new monitors to rigs that will allow it to track via the Internet wind speed, wave heights and pitch and roll during a storm.

“We’ll be able to see key things happening in real time,” Noble spokesman John Breed said.

In the storms’ aftermaths, some loose rigs dragged mooring lines and anchors beneath them, raking the sea floor and damaging pipelines. El Paso Corp., the largest U.S. natural gas pipeline outfit, has buried some offshore pipelines deeper and added breakaway joints that automatically shut off the flow of gas if the line is broken.

On the refining side, the two biggest challenges after the storms passed were power disruptions and flooding both of which prompted refiners to examine their practices and make adjustments, said Cindy Schild, refining issues manager for the American Petroleum Institute, a trade group. After Katrina and Rita, refineries accounting for 29 percent of U.S. refining capacity were temporarily shut down, according to the U.S. Energy Department.

Some refineries have raised critical equipment so it won’t flood, Schild said. They’ve also beefed up plans to get backup power as quickly as possible, she said.

“It wasn’t that they weren’t prepared,” Schild said. “They had contingency plans, shutdown procedures. I just think getting two, back-to-back hurricanes in such a similar location compounded everything.”

Asked during a briefing this week what oil and refining companies have done to prepare for the approaching hurricane season, Homeland Security Secretary Michael Chertoff responded, “The companies have improved plans and facilities, but there is only so much you can do.”

Analysts say all the enhancements are important. Whether they’ll lessen the impact of another major storm, however, remains to be seen.

“The proof’s in the pudding,” said David Pursell, an analyst with Pickering Energy Partners in Houston. “Obviously, rig guys and drilling guys are going to be more cautious. The question is: What can you do to a fixed structure that’s going to make it less susceptible to 60-foot waves? I think you have to live through one to see if anything’s changed.”

Added Joe Gordon, the MMS’ deputy regional supervisor for field operations: “Hopefully, we’ve seen the worst Mother Nature can throw at you in the Gulf. There were some hard lessons learned, but I think we’re in better position today than we were pre-Katrina.”

Companies also learned after Katrina and Rita that it’s impossible to run operations offshore if you can’t find and take care of your people onshore. The hurricanes shattered communications and scattered people for hundreds of miles.

Shell has arranged to create base camps complete with lodging, showers and food preparation for hundreds of refinery and pipeline workers about eight hours after a storm passes. The facilities would be hauled in by 18-wheelers and erected at prearranged sites.

Beginning June 1, Shell also will have generators the size of mobile homes atop 18-wheelers in various locations across the Gulf Coast, ready to roll at a moment’s notice. They’d be used to power the base camps, retail stores along evacuation routes and other sites, said Mike Meeuwsen, who oversees emergency management for Shell Oil Products.

“If you need people to get your operations back in business, the sooner you can meet their needs, the better off you are,” Meeuwsen said. “That’s what this is all about.” 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

NEW YORK: Lehman Brothers Holdings, the fourth-largest investment bank in the United States, said Tuesday robust stock trading and buyout business pushed second-quarter profit up 27 percent year-over-year.

For the three months ended May 31, profit after paying preferred dividends rose to $1.26 billion (\940 million), or $2.21 per share, from $986 million, or $1.69 per share, a year earlier.

Fees charged for stock trading amid a record run on Wall Street, as well as those charged to companies for advice on takeover deals, helped drive Lehmans business during the quarter. Revenue rose 25 percent to $5.51 billion (\4.13 billion) from $4.41 billion a year prior.

Results topped Wall Street projections for earnings of $1.88 per share on revenue of $4.97 billion (\3.72 billion), according to analysts polled by Thomson Financial.

Chairman and Chief Executive Richard Fuld said in a statement the banks diversification efforts contributed to strong growth in non-U.S. net revenue, which represented nearly half of total net revenue for the quarter.

Fuld, who has led Lehman since it was spun off from American Express in 1994, has transformed the company into one of Wall Streets biggest investment banks. While Lehmans bond business has traditionally been its biggest revenue stream, Fuld has steered the bank into more profitable businesses globally, such as merger and acquisition advisory.

Diversifying the firm has allowed Lehman to remain profitable even as some of its key businesses lag. For example, this year the company has been able to compensate for weakness in its mortgage banking business related to subprime loans.

Lehmans capital markets business posted revenue of $3.6 billion (\2.7 billion) during the quarter, up 17 percent from $3.1 billion a year earlier. However, the fixed income segment of that business - which includes bonds, derivatives and credit products - fell 14 percent to $2.2 billion (\1.65 billion) because of “continued weakness in the U.S. residential mortgage business.”

Investment banking posted revenue of $1.2 billion (\900 million), up 55 percent from $741 million (\555 million) a year earlier. The flurry of takeover deals during the quarter caused many companies to seek financing, driving Lehmans debt origination up 87 percent to $530 million (\397 million) and equity origination up 60 percent to $333 million (\249 million).

Shares of Lehman, which fell 10.8 percent during the second quarter, closed at $75.68 on Monday. Shares rose $2.42, or 3.2 percent, to $78.10 in premarket electronic trading.

The Iranian president was talking on the eve of his departure from Tehran, amid a storm of opposition to his visit to New York and growing international alarm over his country’s nuclear ambitions. He is poised to deliver a defiant address to the UN General Assembly this week.

The Iranian military showed off a new long-range ballistic missile called the Ghadr - Farsi for ‘power’. In a speech marking the event, Ahmadinejad shrugged off US and regional concerns about Iran’s more assertive role, saying: ‘Iran is an influential power in the region and the world should know that this power has always served peace, stability, brotherhood and justice.’

But with the Iranian leader expected to arrive in New York on Sunday for the annual meeting of the 192-member assembly, diplomats said his visit was likely to raise the temperature further surrounding international moves to curb Iran’s nuclear enrichment programme.

Members of the UN Security Council have been informally consulting on the possibility of a new and tougher resolution in the wake of the Iranians’ refusal to abandon its uranium-enrichment.

Last week, the French Foreign Minister Bernard Kouchner warned the Iranians that if diplomatic efforts failed to halt Iran from becoming a nuclear power, war was a possibility.

Speaking to The Observer, the British Foreign Secretary, David Miliband, played down that prospect, and interpreted Kouchner’s remarks as a move to convey to Iran ‘the depth of feelings’ about ‘the dangers of setting off a nuclear arms race in the Middle East.’

He said both Britain and its EU allies were ‘100 per cent committed to a diplomatic solution.’ But when asked whether he thought the issue ‘will be solved by diplomatic means,’ he stopped short of saying yes. He replied instead: ‘I think it can be solved by diplomatic means.’

Ahmadinejad’s visit has already sparked bitter opposition in New York.

He has been forced to cancel plans to ‘pay respects to the American nation’ at the ‘Ground Zero’ site of the September 11 terror attack on the World Trade Center amid protests from relatives of some of the victims.

On Friday, the president of Columbia University, Lee Bollinger, overruled its School of International and Public Affairs and rescinded an invitation for Ahmadinejad to speak at its World Leader’s Forum. The invitation had prompted widespread criticism in the light of Ahmadinejad’s remarks calling for Israel’s destruction and questioning the facts of the Nazi Holocaust.

Bollinger said the school could still have Ahmadinejad speak to faculty and students in a less formal and high-profile forum, but there appeared no immediate plans to revive the invitation.