More Katrina Fallout: Higher Gas Prices
By Justin Gardner | Related entries in Breaking News, Economy, Environment, Hurricane KatrinaUh-oh.
Hurricane Katrina’s effects may indeed be felt all over the nation
The region that produces and refines a major portion of the nation’s oil and natural gas was largely shut down by Hurricane Katrina yesterday, further tightening strained energy markets and sending prices to new highs.As oil companies evacuated offshore operations throughout the Gulf of Mexico, oil production in that region was reduced by 92 percent and gas output was cut by 83 percent.
The latest interruptions in oil supplies are likely to send retail gasoline prices even higher than the current average of $2.60 a gallon. They have prompted the Bush administration to say it would release emergency oil stocks from the Strategic Petroleum Reserve if needed.
I think Bush opening up the Strategic Petroleum Reserves is a good move, and should be used more often. After all, if we can adjust the interest rate every quarter in response to the economy, why not the amount of oil we have in the reserves? Some quarters we won’t open them up (and therefore, fill them back up) and some we will.
Crazy idea or has the time come to not guard the reserves so jealously?
And here are some more numbers to ponder:
Crude oil prices on the New York Mercantile Exchange closed at $67.20 a barrel yesterday, up 1.6 percent, after touching a high of $70.80 a barrel in earlier electronic trading.This entry was posted on Tuesday, August 30th, 2005 and is filed under Breaking News, Economy, Environment, Hurricane Katrina. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.Natural gas futures soared 11 percent after operations at a major hub in Louisiana were temporarily halted. They closed at $10.85 a thousand cubic feet, after reaching a high of $12.07. Disruptions at refineries also pushed futures for gasoline and heating oil to record highs on Nymex. Gasoline contracts closed up 6.9 percent at $2.06 a gallon while heating oil gained 3.9 percent, to $1.91 a gallon.
Producers are currently pumping as much oil as they can and have little spare capacity left to make up for any shortages. While that leaves no margin for major disruptions from hurricanes and other disasters, most analysts cautioned that it would be days before a full assessment of the damage to pipelines, refineries and offshore platforms was completed.
The Gulf of Mexico, which produces 27 percent of the nation’s oil and a fifth of its natural gas, is dotted with nearly 4,000 platforms linked by 33,000 miles of underwater pipelines. Over the weekend, oil companies withdrew their workers from 615 platforms and 96 drilling rigs in the gulf.
Oil production was reduced by about 1.4 million barrels yesterday and gas production by 8.3 billion cubic feet, according to the Minerals Management Service, a unit of the Department of the Interior. Since Friday, oil output has been cut by a total of 3.1 million barrels. Along the coast, at least nine refineries were closed in anticipation of the storm. These have a total refining capacity of about two million barrels a day, or 10 percent of the nation’s refining output.
