As I was watching how bad Hurricane Katrina was looking and worrying about the people down there, I realized that a large hunk of our nation’s oil capacity was about to be submerged. And lo and behold, I was unfortunately right:
Crude-oil and natural-gas prices may soar after Hurricane Katrina moved into production regions of the Gulf of Mexico, forcing companies including Exxon Mobil Corp. and Chevron Corp. to close operations.
Royal Dutch Shell Plc said it shut 420,000 barrels of daily oil production in the Gulf. The Louisiana Offshore Oil Port, which handles about 11 percent of U.S. imports, closed yesterday. Katrina is one of the most powerful storms ever to enter the Gulf, source of about 30 percent of U.S. oil production and 24 percent of the country’s natural gas.
“Forecasters are saying Katrina could do more energy damage than any storm in recent years,” said Jason Schenker an economist with Wachovia Corp. in Charlotte. “It’s not just that there’s going to be outages for the next couple of days. With shutdowns and damage at platforms and refineries, the bullish impact could be felt for the rest of the year.”
$3 a gallon for gas? Brother, we’re going to be lucky if we can keep it to $5. All bets are now off.
Here’s a picture:
