More than 200,000 customers of American Electric Power Co's Texas unit, which serves the affected area, were without power on Thursday morning.

Dolly, the first hurricane of the 2008 Atlantic storm season to cross land, dumped up to 12 inches (30 cm) of rain in the first hours after coming ashore at the barrier island of South Padre Island on Wednesday, where it ripped off roofs and snapped trees.

Residents emerged from their homes and shelters to walk through streets littered with debris, toppled street lights and downed power poles.

"Everything is gone. Everything got wet," said Amber Acevado, who runs a flooring store on South Padre Island. "You stand here inside the store, you can see right through to the outside."

Many residents and tourists trapped on the island by the storm left after a causeway to the mainland reopened.

The storm missed most offshore drilling rigs and production platforms in the Gulf of Mexico.

US crude oil prices rose earlier this week on worries of possible storm damage to offshore drilling rigs. But oil prices fell after the storm barely dented supplies, and hit a 7-week low of US$123.62 a barrel on Thursday.

POST-DOLLY FLOODING FEARED

Dolly was downgraded to a tropical storm late on Wednesday and remained at that strength as it moved inland, dumping enormous amounts of rain on south Texas and northeast Mexico and with sustained winds of 50 mph (80 kmh). It was expected to weaken further to a tropical depression later on Thursday.

The US National Hurricane Center in Miami said it could produce total rainfall of up to 20 inches (51 cm) in some places. "These rains are very likely to cause widespread flooding," the center said.

The storm was centered near Laredo, Texas, the NHC said in a report issued at 11 a.m. EDT (1500 GMT).

The full effect of the flooding might not be seen for days as the rainfall flowed into the Rio Grande Valley, home to more than 1 million people.

There were no immediate reports that levees along the Rio Grande had been breached.

Texas Gov. Rick Perry has put 1,200 National Guard troops on alert in case they are needed to help cope with the storm's aftermath.

Mexico's navy on Wednesday recovered the body of a fisherman who had gone missing off the Yucatan Peninsula as the storm passed through.

The only other reported casualty from the storm so far was a 17-year-old boy who was seriously injured when he fell seven stories from a condominium balcony in South Padre Island. (Additional reporting by Jim Forsyth in San Antonio; Writing by Chris Baltimore, editing by David Storey) (For latest US National Hurricane Center reports, see http://www.nhc.noaa.gov/)