* Nearly 2 million evacuate as Gustav nears Gulf coast
* New Orleans ghost town with fewer than 10,000 remaining
* Bush bows out of Republican convention, to visit Texas
By Tim Gaynor and Matthew Bigg
NEW ORLEANS, Aug 31 (Reuters) - Nearly 2 million people fled the Louisiana coast on Sunday as Hurricane Gustav moved within hours of striking land, possibly with a weaker punch than 2005’s devastating Hurricane Katrina.
The oil industry from Texas to New Orleans was taking no chances either, shutting down nearly all offshore platforms and many refineries as Gustav threatened the region that pumps a quarter of the U.S. oil supply.
Gustav also took center stage in U.S. presidential politics as Republican candidate John McCain curtailed activities for Monday’s opening day of the convention that will formally nominate him to face Democratic nominee Barack Obama in the November election.
Louisiana Gov. Bobby Jindal said an estimated 1.9 million people had fled coastal areas and only 10,000 people were believed to have stayed behind in New Orleans.
"This is still a very dangerous storm," Jindal said at a news conference. "It’s not too late to evacuate. I strongly encourage you to do so."
Long lines of cars and buses streamed out of New Orleans after Mayor Ray Nagin ordered mandatory evacuation of the city of 239,000.
Forecasters projected Gustav would land west of New Orleans around midday on Monday. But it was no longer expected to be a Category 4 hurricane on the five-step Saffir-Simpson scale.
The storm’s top winds were expected to be around 125 mph (200 kph), making it a Category 3 storm, the U.S. National Hurricane Center said.
Nonetheless, a storm surge of up to 14 feet (4.3 metres) could threaten the same levees that failed three year ago during Hurricane Katrina. Federal officials say the levees protecting New Orleans are stronger now but still have gaps.
The storm evoked memories of Katrina which struck almost exactly three years ago, flooding 80 percent of the city, killing 1,500 people in five states and costing $80 billion.
Nagin warned anyone who defied evacuation orders they would face extreme danger, saying travel trailers that had housed some of those displaced by Katrina might "become projectiles" in the hurricane-force winds. He laid down a dusk-to-dawn curfew and told looters they would be sent straight to prison.
President George W. Bush and Vice President Dick Cheney, accused of a slow and botched response to Katrina’s chaos, said they would not attend this week’s Republican National Convention in St. Paul, Minnesota. Instead, Bush will travel to Texas on Monday to oversee emergency response efforts.
Republican presidential candidate McCain headed to the Gulf to survey preparations and ordered political speeches canceled for the opening day of his nominating convention to avoid a festive atmosphere.
By most accounts, evacuations from New Orleans and other coastal cities were proceeding smoothly although traffic was moving slowly on clogged highways. More than 11.5 million residents in five states could feel the impact of the storm.
The U.S. Coast Guard reported the first storm-related death in Florida, where a man fell overboard as his craft ran into heavy waves. Three others were believed to have died in hospital evacuations in Louisiana, Gov. Jindal said.
Katrina was a Category 3 when its 28-foot (8.5 metre) storm surge burst levees on Aug. 29, 2005. New Orleans degenerated into chaos as stranded storm victims waited days for government rescue and law and order collapsed.
New Orleans resident Vanessa Jones, 50, said she had planned to stay but changed her mind after watching the news all night.
"I can’t take a chance because so many people died in Katrina," Jones said as she prepared to board a bus headed to an unknown destination.
Thousands of people, still carrying emotional scars from Katrina, jammed highways out of New Orleans. The government lined up trains and hundreds of buses to evacuate 30,000 people who could not leave on their own and Nagin said 15,000 had been removed from the city, including hundreds in wheelchairs.
Residents boarded up the windows of their shops and homes before leaving town, while others hunkered down as "hold-outs" with stockpiled food, water and shotguns to ward off looters.
"I saw quite a bit of looting last time with Katrina, even 30 minutes after the winds had stopped," said construction contractor Norwood Thornton, who opted to stay behind to protect his home in New Orleans’ historic Garden District.
Gustav weakened to a still dangerous Category 3 storm after it passed over Cuba. It killed at least 86 people in the Dominican Republic, Haiti and Jamaica.
But the latest warnings from the National Hurricane Center brought some relief with signs that the storm was weakening slightly and sucking up less power over the warm Gulf water that made Katrina an explosive Category 5 as it moved north.
Katrina and Hurricane Rita, which followed it three weeks later, wrecked more than 100 Gulf oil platforms, but Gustav could deal a harsher blow.
In a special trading session to accommodate the Labor Day holiday and the storm’s impact, U.S. crude oil features on Sunday rose nearly $3 to over $118 per barrel.
"It remains likely that Gustav will prove to become a worst case scenario for the producing region and places the heart of the oil production region under a high risk of sustaining significant or major damage," said Planalytics analyst Jim Roullier.
As Gustav swirled through the Gulf, forecasters also kept an eye on Tropical Storm Hanna, which weakened slightly in the Atlantic about 140 miles (225 km) north of Grand Turk Island.
(Additional reporting by Tom Brown in Miami and Bruce Nichols, Chris Baltimore and Erwin Seba in Houston; Writing by Jim Loney; Editing by Mary Milliken and Vicki Allen)