Hurricane Gustav slammed ashore on the US Gulf Coast just west of New Orleans hammering the city devastated by Katrina in 2005 with surging floodwaters that threatened its rebuilt levees. The storm was weaker than had been feared but waves splashed over floodwalls containing the New Orleans Industrial Canal, triggering a tense watch over the barrier system that failed three years ago, flooding 80 per cent of the city and stranding thousands of people. Six inches of water pooled in some streets near the canal, and troops prepared to evacuate residents. But the US Army Corps of Engineers said the levees had not been breached and city pumps were able to keep up with the flooding. A National Guard official said the Department of Defense had authorized up to 50,000 troops to help with rescue, clean-up and the possibility of looting. Nearly 2 million people fled the Gulf Coast as Gustav approached and only 10,000 were believed to have remained in New Orleans. Louisiana Gov. Bobby Jindal warned residents it was too early to sound the all-clear because floodwaters could take hours to recede. He said: "Just because the storm is moving over your area, do not think that the tidal surge impacts are yet over." Oil plunged more than £2 as concerns that Hurricane Gustav would cause lasting damage to the US oil sector eased after the storm weakened. Over 12 per cent of the US refining capacity - the output of 12 Gulf Coast refineries - were shut down and another 10 refineries were running at reduced rates Phil Flynn of Alaron Trading in Chicago said: "It looks like Gustav is not going to be as strong a storm as the market had feared.There is a belief that this storm is not going to do much damage, that we are going to be able to get through this and not miss a beat and continue our downward move." Hurricane Gustav also took centre stage in US politics. The Republicans opened their convention on Monday to nominate presidential candidate John McCain with a bare-bones program stripped of the usual pomp and circumstance. And President George Bush, who was heavily criticized for the slow Katrina relief efforts, canceled his appearance at the Republican convention and traveled to Texas to oversee emergency response efforts to Gustav. Meanwhile Tropical Storm Ike, the ninth of a busy Atlantic hurricane season, formed midway between Africa and the Caribbean and was expected to grow rapidly into a hurricane that could threaten the United States or the Caribbean.