Posts tagged “Hurricane Katrina”
As Hurricane Sandy bears down on the East Coast, a lot of prognosticators are offering up predictions for what it means for gasoline prices in that market. I thought it might be of interest to note the differences in Hurricane Sandy and Hurricane Katrina concerning the oil and gas markets.
Hurricane Sandy has already reduced refining capacity in the Northeast, and the possibility exists of extended outages if any of these refineries take significant damage from the hurricane. Gasoline and heating oil inventories in the area were already very low, and this increases the chances of sharp gasoline spikes across the area. However, these spikes are expected to be short-lived and localized, as the area also receives gasoline from Europe and from the Colonial Pipeline, which brings supplies to the East Coast from the Gulf Coast. As long as refinery outages are not prolonged, the gasoline markets should return to normally fairly quickly. However, people would be wise to make sure their cars are topped off with gasoline and that their heating oil supplies are adequate.
Hurricane Katrina presented a double-whammy for the oil and gasoline markets. When it tore through the Gulf of Mexico, it seriously damaged a lot of oil producing infrastructure that is critically important for the U.S. fuel supply. When Katrina made landfall, it damaged a number of refineries. The result was a shortage of oil capacity — which drove oil prices much higher — and a shortage of gasoline both from the oil shortage and the refinery outages. The oil capacity problem could not be quickly resolved, and as a result oil and gasoline prices remained higher for months. Because the Gulf Coast refineries supply gasoline to many markets, these high prices impacted the entire U.S. market. CONTINUE»
Implicit in the previous post on the recovery of gasoline demand is that the conditions are setting up for a gasoline supply crunch – and the price rise that goes along with that. As I pointed out, refiners are cut back, but they can turn that around pretty quickly. The low utilization numbers could lead to a short-term supply crunch, but as prices recover refiners can bring capacity up quickly. What they can’t do quickly is implement new capacity additions. Due to the collapse in oil and gas prices, projects are being delayed, both in upstream oil production and in downstream refining. This is setting up for another run on prices as demand begins to recover. More on this from… Continue»
I have been so preoccupied lately, that I have barely noticed that there is a potentially very dangerous hurricane moving into the Gulf of Mexico. Furthermore, Tropical Storm Hanna is not far behind. Here are a couple of graphics I picked up from The Oil Drum, which in my opinion always has consistently the best hurricane coverage – particularly as it relates to energy infrastructure: Not only is it forcing the evacuation of lots of oil infrastructure (as did Katrina in 2005), but it is also projected to strike landfall in the same general vicinity. One interesting note is that the IEA announced that they were prepared to release oil stocks if necessary: IEA Ready to Release Oil Stocks if… Continue»
It hasn’t gotten all that much media coverage yet, but it is looking more and more like Mexico has taken a Katrina-sized hit that has devastated Tabasco. I had to go to The Irish Times for this: Government offers aid to Mexico A week of heavy rains over Mexico caused rivers to overflow, drowning at least 80 per cent of the swampy, oil-rich state of Tabasco. Much of the state capital, Villahermosa, looked like New Orleans after Hurricane Katrina, with murky water reaching to second-storey rooftops and desperate people waiting to be rescued. There has been some mainstream media coverage, but so far the MSM is largely asleep at the wheel. Another story that emphasizes how this disaster has impacted… Continue»
I will have a new post up in a day or so (working with Vinod Khosla on something, and then I will finish that bio-butanol post), but until I get that finished, I will recycle this one (from 5/4/06) that details my views on Peak Oil. ——————- Perhaps like many of you, I spend a lot of time trying to predict what the future holds with respect to Peak Oil. I want to know what the effects will be to the U.S., the world, the economy, my employer, but first and foremost I want to know how it will affect my immediate family and me. I am not a “doomer”, but I do think we are facing a very serious… Continue»
The weekly EIA report was released this morning: Summary of Weekly Petroleum Data for the Week Ending November 17, 2006 Some excerpts: U.S. crude oil refinery inputs averaged 15.0 million barrels per day during the week ending November 17, up 60,000 barrels per day from the previous week’s average. Refineries operated at 87.1 percent of their operable capacity last week. Gasoline production inched slightly higher last week compared to the previous week, averaging 8.7 million barrels per day, while distillate fuel production increased as well, averaging nearly 4.1 million barrels per day. U.S. crude oil imports averaged 10.5 million barrels per day last week, up over 1.0 million barrels per day from the previous week. Over the last four weeks,… Continue»
I saw a familiar name today in a news article, which I will get to in a bit. I was reading an article from the Sacramento Bee that said that gas prices may have bottomed out. (I won’t link to the article, since it requires registration). I have been saying that gas prices couldn’t fall much further based on weekly EIA inventory numbers, and were poised to rise. Gas pricing is pretty simple, really. You basically have to watch gasoline inventories, which are reported every week at: This Week in Petroleum If you want a very reliable indicator of which direction gas prices are headed, watch the gasoline inventories graph. When inventories are plunging, as they were in the first… Continue»
I have an essay on conservation ready to go, with some discussion of how Europe deals with high gas prices. However, a couple of newsworthy items are worth commenting on. The Oil Drum beat me to the punch on Chuck Schumer’s grandstanding, but another article caught my eye yesterday. I read a news release from published a study (if you can call it that) by Tim Hamilton, in which he concluded that “corporate markups and profiteering are responsible for spring price spikes” (2). Hamilton claims that the oil industry has blamed 3 factors for rising gasoline prices. They are: 1. Higher oil prices.2. Higher costs for reformulated gasoline.3. The switch from MTBE to ethanol. He then goes on to attack… Continue»
There was a letter to the editor this week in the Billings Gazette entitled There’s no good reason for such high gas prices (1). Ironically, the letter came from Wyoming, which at the time had the 2nd lowest gasoline prices in the country. It is a pretty good lesson on the level of delusion of the average person regarding our energy situation. The Gazette allows blog style commentary following the letter, and here was a sample of the initial responses: It is not the Democrat governor of Wyoming you should be pointing your finger at for high gas prices. Rather it is the Republican controlled oil & gas companies and the rich oil lobbyists in Washington. One only has to… Continue»
There was a story today in the Detroit Free Press on rising gasoline prices (1). Two items caught my attention: “We’ve seen a dramatic increase in gasoline prices,” said Mark Routt, a senior consultant with Energy Security Analysis Inc. in Wakefield, Mass. “Why? The bulk of it is due to an annual and normal change from winter to summer gasoline. Unfortunately for us this year, there is also a significant impact on prices because refiners are switching from MTBE to ethanol as an oxygenate to make summer gasoline.” Methyl tertiary-butyl ether (MTBE) is a gasoline additive that oil refiners have used to help meet emissions standards set by the Clean Air Act of 1990. Refineries around the country have stopped… Continue»