Fears of an international energy crisis mounted on Wednesday as the scale of human and economic devastation caused in the southern US by Hurricane Katrina became fully apparent. ...Spiking gas prices and shortages -- shortages? -- will be political doom for Bush. Mark my words.
As the human tragedy unfolded, there were fears that the economic impact of the storm, which has paralysed the Gulf of Mexico oil industry, could be felt around the globe.
Some analysts cut US growth forecasts, saying soaring petrol prices would hurt consumer spending. “US [petrol] prices are now in the process of the most dramatic spike ever seen,” said Kevin Norrish, an analyst at Barclays Capital. “It is now appropriate to talk of a major energy crisis.” ...
With nine Gulf Coast refineries closed, US wholesale petrol prices hit a closing record of $2.65 per gallon, up 34 per cent since the storm, and supplies ran short in some areas. Chevron said it had started rationing gasoline across the south-east, a move analysts said could lead to panic buying, particularly ahead of the Labor Day weekend. US consumers have not seen shortages since the petrol station line-ups that followed the 1973 Arab oil embargo.
“We recognize that prices are high,” said Mary Rose Brown, spokeswoman for Valero, a top US refiner. “The market is responding to the overnight lossof almost 2m barrels per day of domestic production. Since the US is already dependent upon 1m BPD of imports to meet demand, there is a real fear ofshortages in the near-term. Pipeline outages due to power losses have exacerbated an already challenging situation.”
Fears that oil prices could spiral out of control prompted the US government to say it would tap its emergency reserve, causing prices to dip momentarily below $70 a barrel. But the relief was short-lived, with many traders seeing the statement as a political gesture. The US Environmental Protection Agency also announced it would temporarily waive clean air standards for fuel, allowing US refiners to increase production and permitting greater petrol imports. Federal and state regulations restrict the make-up of petrol, which makes it difficult to import supplies from another state or from abroad.
Governments have begun to worry that a looming US petrol shortage could affect their economies. Europe could see strong competition for limited refinery products. Wholesale petrol prices in Europe rose by 10 per cent. “If the assessment of the damage shows a severe crisis in the petrol sector, the crisis will not be limited to the US it will be a global one,” said Claude Mandil, executive director of the International Energy Agency, the consuming nations' watchdog.
The industry scrambled to determine how long it would take to reopen its installations. Even after repairs, oil companies could face problems getting personnel to work.
Funny how his downfall might be caused by something that's not entirely his fault.
And let's not forget that higher gas prices will disproportionately affect the poor, especially in the United States, where people in many communities have no choice but to drive. That's why I don't disagree with the release of oil from the reserve, even if it's mostly a symbolic gesture.
But lines at pumps? Doom.
MORE: "There is no question" gasoline will hit $4/gallon.
