Blow to Refiners Will Hit Consumers

Valero (VLO - commentary - Cramer's Take) breaks par, but not the way Bill Greehey wants it to happen.

Don't know Greehey? He's the gung-ho guy who runs Valero, one of the great executives of this era, who knows refining better than anyone in the world. Greehey's got his hands full right now with his St. Charles refinery, the one right next to New Orleans, down for the count and a dramatically reduced ability to get crude to his other refineries. I can't believe he made time for a phone call from me, but we were supposed to have lunch together in San Antonio today, so he took a moment away from the crisis to give me an update.

Greehey's worried, worried about his employees, worried about their families. He says he still hasn't accounted for 500 people who work for the company, because his refining capacity is right in the middle of the Katrina aftermath. Greehey makes the point that the Mississippi River isn't navigable and may not be for some time, and that will mean a bigger squeeze and higher prices because crude can't get to where it has to go. He describes it as something that is no longer a short-term problem.

I also got the feeling, although he didn't say it point-blank, that $3.00 gasoline might be just a way station on the road to still-higher prices.

To me, that's a terrible picture, one that will make an unmistakable impact on all of retail and all consumption.

Greehey says it is still too early to even think about this stuff; he's still trying to rescue workers. It's callous to talk about a stock that is up 10 points in two days.

But one thing's clear: The refining business is going to have to pass on some big costs here, and the costs are going to be borne by the consumer.

Federal Reserve, are you listening?

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James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for ActionAlertsPLUS by clicking here. While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column by clicking here. Listen to Cramer's RealMoney Radio show on your computer; just click here. Watch Cramer on "Mad Money" at 6 p.m. ET weeknights on CNBC. Click here to order Cramer's latest book, "Real Money: Sane Investing in an Insane World," click here to get his second book, "You Got Screwed!" and click here to order Cramer's autobiography, "Confessions of a Street Addict." Cramer appreciates your feedback and invites you to send him an email by clicking here.