Looming hurricane may deal a blow to Gulf oil - Aug. 31, 2008

A parcel is at stake as the production faces potentially its worst calamity on account of Hurricanes Katrina and Rita devastated crude and gauze facilities in 2005. The Gulf of Mexico is homely to 4,000 drilling platforms and 33,000 miles of pipeline, which letter 1.3 million barrels a time to the Gulf Coast's 56 refineries.

Approximately 1.3 million barrels a period are produced in the Gulf - 25% of the oil produced in the United States, according to the U.S. Power Data Administration. The region again accounts for augmented than 10% of the country's constant gas production. Gustav, a Sort 3 storm after raking complete Cuba on Saturday, is expected to strengthen as it gets closer to the U.S. Forecasters predict it testament touch land as early Monday.

The hurricane's pathway may steer hold up finished the emotions of the region's biggest concentration of oil and petrol producers. Its force on crude oil prices, which settled on Friday at $115.46 a barrel, could be tested as soon as Sunday. The Contemporary York Mercantile Alternate will clasp a certain trading session starting at 2:30 p.m. ET.

Yet offshore oil industry has already been shut down and experts divulge it could pay for worse. It could damage gasoline refineries, which could mail the bill of oil and gas back up near enter highs.

Production will be shut down in the course of action of the storm," said Cathy Landry, a spokeswoman for the American Petroleum Institute. Not every rig will be in the storm's path, on the other hand the oil companies tend to be express cautious." Production at risk Gustav has already interrupted production. The criterion hurricane halts oil drilling production for bounteous than a week, according to API. Rig workers, who generally longing to flee two to three days before a storm hits, keep already evacuated innumerable facilities in the Gulf.

Platforms obtain to withstand not honest the winds, however further waves, drizzle and currents," Landry noted. The U.S. Branch of the Interior estimates that 76% of the Gulf of Mexico's platforms and 67% of Gulf pipelines were in the open road of Hurricanes Katrina and Rita in 2005. The cyclones, both of which reached Category 5 strength, destroyed 113 offshore oil and consistent gas platforms and damaged 457 pipelines.

Gustav appears to be heading in the alike course - equitable up the intestine of the oil drilling and refining region. Whether the storm was heading West or East, then companies could even-handed shut down one region of the Gulf," Landry said. On the contrary it looks to be heading ended the center, so a skilled abundance of the Gulf will be shut down." The ample storms in 2004 and 2005 did appreciable damage to oil drilling platforms in the Gulf of Mexico, severely cutting into function to gasoline refineries on the shore.

Though slow-moving, forceless tropical storms over the Gulf of Mexico can halt oil drilling, able hurricanes that hit land can knock absent refineries. That's as about 40% of U.S. Gulf Coast, particulary in oft-hit states agnate Texas and Louisiana. After Katrina and Rita, 30% of Gulf Seaside refineries were shut down or operating with reductions.

It's uncommon for a refinery to be completetly knocked elsewhere by a hurricane, nevertheless manifold are susceptible to wind and moisten damage that can line avail to and from the facilities. Much the same to offshore drilling platforms, refineries are sometimes shut down for added than a week before they can repay to complete operability, according to API.

Factor of the motive Katrina and Rita led to such a nail in gas prices was that there weren't sufficiently functional facilities to build up for the disappeared output. Although power at distinct U.S. United States in three decades. Prices could bob Some of those living on the Gulf Coast corner already reported seeing gas prices dance almost 10 cents over the bygone infrequent days. Provided Gustav damages refineries, prices could activity even higher. Depending on the timing and impact, the storm could de facto step this market," said Alaron Trading analyst Dan Flynn.

It's not a far stretch to study oil back over $125 and gas back above $4." Flynn famous that Tropical Storm Hanna besides threatens to enter the Gulf of Mexico, though its system is less certain.

In 2005, the Gulf Coast was battered by two hurricanes - Katrina and Rita - in the span of a infrequent weeks, bringing multifarious Americans their cardinal glimpse at $3 a gallon for usual gas.

The destruction from Hurricane Katrina alone led gasoline prices to bounce 46 cents, or 17%, in honorable one week to a governmental sample of $3.11, according to the U.S.

A homogenous surge nowadays would correspondence gas prices to nearly $4.40 a gallon, blooming former the preceding put in writing of $4.11 a gallon establish in The middle of summer and erasing all the declines seen over the endure uncommon weeks. The backside string is what the damage to the refineries will be, but the markets yet tend to overreact," Flynn added. We'll imaginable behold a bull spike in the value of gasoline prices."

Lessons learned? Experts deliver that the lessons learned from Katrina and Rita might mitigate the fallout of Gustav.