There is a story unfolding here that we, as citizens of this country really need to understand. Potentially, Potentially I say, the hurricane strike against New Orleans (Lousiana), Mississippi, Alabama can have absolutely devastating impact on both gas and oil in this country. Shortages, much higher prices, even rationing may be in the immediate future for much of this country. Below is an excellent article that does a better job of explaining it than I can.
by Ben P
"...I want to emphasize that this is not some kind of "garden variety" natural disaster like the hurricanes (even some of the more devastating ones) that hit the US southeast every several years. What is happening is frankly unprecendeted, and will send shockwaves across the US and, potentially, the rest of the world for some time to come...
"...Were it to strike directly and furiously, Katrina would not only take a massive human toll, but also an enormous geopolitical one. The Port of Southern Louisiana is the fifth-largest port in the world in terms of tonnage, and the largest port in the United States.."
"..The United States imports crude oil, petrochemicals, steel, fertilizers and ores through the port. Fifteen percent of all U.S. exports by value go through the port. Nearly half of the exports go to Europe..."
"..The port might become in whole or part unusable if levees burst. If the damage to the river and port facilities could not be repaired within 30 days when the U.S. harvests are at their peak, the effect on global agricultural prices could be substantial. There is a large refinery at Belle Chasse. It is the only refinery that is seriously threatened by the storm, but if it were to be inundated, 250,000 barrels per day would go off line. Moreover, the threat of environmental danger would be substantial. About 2 percent of world crude production and roughly 25 percent of U.S.-produced crude comes from the Gulf of Mexico and already is affected by Katrina. Platforms in the path of Katrina have been evacuated but others continue pumping. If this follows normal patterns, most production will be back on line within hours or days. However, if a Category 5 hurricane (of which there have only been three others in history) has a different effect, the damage could be longer lasting. Depending on the effect on the Port of Southern Louisiana, the ability to ship could be affected.."
"...it must be borne in mind that the Mississippi remains a key American shipping route, particularly for the export and import of a variety of primary commodities from grain to oil, as well as steel and rubber..."
"...The Louisiana Offshore Oil Port is closed. It is the only terminal in the US capable of receiving very large oil tankers, such as those used to ship Saudi or Venezuelan crude to the US. Much of the US Gulf of Mexico crude output is probably shut in right now, and will likely remain shut in for some time to come. Shipping will also be disrupted for a while, too. Refining is also concentrated on the Gulf coast. If a large enough number of refineries are closed -- and stay closed -- gasoline prices will skyrocket.
If that is not bad enough, the Henry Hub in Louisiana is closed too. It is the main -- I think possibly the only -- point where US Gulf natural gas flows into the continental US natural gas network. The folks at the New York Mercantile Exchange are having an emergency meeting about this (the Henry Hub is the price point for NY natgas futures). A lengthy closure will cause problems for traded natural gas.
And could cause a major crisis for natural gas in the US as soon as this week if it closed too long. With all the focus on oil, no one has paid much attention to the fact that natural gas production in North America has been declining for the last several years and, aside from the deepwater Gulf of Mexico, the Alaska North Slope and the McKenzie Delta (the gas from Alaksa and northern Canada will likely not its way south before 2010), there is not enough gas out there to meet rising demand (especially for power generation). Americans are heavily dependent on the Gulf for natgas and oil, and lengthy outages or severe damage to capacity will only tighten the squeeze on energy markets..."
Hold on, this is just the first in a whole series of changes in store for the United States and the world. Remember, that our entire way of life, EVERYTHING, is based on cheap, available oil and natural gas. Take that away, or make it very expensive and hard to get, and you have an entire civilization is jeopardy. Believe it.
PS:
Pricing analysts say consumers can expect even higher prices at the pump.
August 31, 2005: 12:46 PM EDT
By Grace Wong, CNN/Money staff writer
http://money.cnn.com/2005/08/31/news/gas_prices/index.htm
(In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.)
"NEW YORK (CNN/Money) - Consumers can expect retail gas prices to rise to $4 a gallon soon but whether they stay there depends on the long-term damage to oil facilities from Hurricane Katrina, oil and gas analysts said Wednesday.
"There's no question gas will hit $4 a gallon," Ben Brockwell, director of pricing at the Oil Price Information Service, said. "The question is how high will it go and how long will it last?"
OPIS tracks wholesale and retail oil prices and provides pricing information for AAA's daily reports on fuel prices.
Brockwell said with gasoline prices now exceeding $3 a gallon before even reaching the wholesale level, it "doesn't take a genius" to expect retail prices to hit $4 a gallon soon.
"Consumers haven't seen the worst of it yet," Brockwell said.
He expects consumers in the Southeast and Northeast to be pinched first, following the impact of Hurricane Katrina on the Gulf Coast region..."
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