Gustav Already Affecting Oil Prices

Frank Williams
by Frank Williams
gustav already affecting oil prices

Tropical Storm Gustav, which some experts say will be the worst Gulf of Mexico hurricane since Katrina, is projected to hit the Louisiana Gulf Coast early next week. After the Katrina fiasco, you can count on three things: 1. Residents of New Orleans will evacuate when they're told to; 2. FEMA will be on full alert; and 3. Gasoline prices will go up. Bloomberg reports Royal Dutch Shell Plc, BP Plc and ConocoPhillips are already cutting production and evacuating workers from their off-shore platforms along the Louisiana coast. If Gustav follows the predicted path (there's a 70-75 percent likelihood it will), it could halt production of 1.2m barrels of crude per day. Crude oil for October delivery has already gone up 1.5 percent; overall, oil has gained 3.3 percent since Gustav formed on August 25. The price of natural gas for September delivery also went up, with a 4.9 gain so far. Even if Gustav changes course, it could still affect prices because 42 percent of U.S. refining capacity is located along the Louisiana and Texas Gulf Coasts. Hold onto your wallets, folks. It's going to be a bumpy ride.

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4 of 31 comments
  • Optic Optic on Aug 28, 2008

    boy, the level of discourse around here really shoots up when politics is introduced

  • VLAD VLAD on Aug 28, 2008

    The early predictions are based on the people of NO wanting to be the first ones in line with their hand out. What a gig, 50 or 100b of taxpayer money blown on crack and whores and here comes the next and bigger check.

  • on Aug 28, 2008

    So...all of the TRILLIONS of miles that we DIDN't drive this summer isn't going to come into play? All of the crude we DIDN't use...and yet...oil goes up.

  • on Aug 28, 2008

    All the compaints about oil going up and there is no will to drill for the huge available oil? ANWAR is a northern wasteland and offshore drilling is proven safe with the modern technology. Yet the enviros hold the country hostage with the help of the Democrats. The government is making the real windfall profits and they also make a lot more off vehicle sales than the companies can dream of. People really need to wake up. "Obama thinks government is not getting a "reasonable share" of oil companies' profits, which in 2007 were, as a percentage of revenue (8.3 percent), below those of U.S. manufacturing generally (8.9 percent). Exxon Mobil pays almost as much in corporate taxes to various governments as the bottom 50 percent of American earners pay in income taxes. Exxon Mobil does make $1,400 a second in profits — hear the sharp intakes of breath from liberals with pursed lips — but pays $4,000 a second in taxes and $15,000 a second in operating costs."