This column was originally published on RealMoney on Aug. 31 at 12:47 p.m. EDT. It's being republished as a bonus for TheStreet.com readers.

Valero

(VLO) - Get Report

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.

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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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