Hurricane Katrina could lead to higher gasoline prices…Shut-in procedures began last Friday for offshore drilling rigs…Continental cancels 111 flights today at airports in hurricane region…
Hurricane Katrina could wind up hurting the pocketbooks of motorists across the country. The storm caused the shutdown of some offshore production.
Barbara Shook with Energy Intelligence says Hurricane Katrina was a concern for refinery and import operations in the New Orleans area.
Shook says some drilling rigs will remain closed until undersea pipelines are inspected for possible ruptures, because oil companies would rather have their offshore facilities shut-in than have a spill clean-up.
Shook says gasoline prices will be affected by the hurricane.
Shook says her greater concern is what might happen to natural gas production.
Shook says releasing strategic oil reserves won’t help much. With Hurricane Ivan, some 5.4 million barrels was released from the reserve, but that’s the equivalent of about one-fourth of U. S. consumption for one day.
Apache says it started shutting-in production in parts of the Gulf of Mexico on Saturday in advance of Hurricane Katrina. Currently, the independent oil and gas company has shut-in gross operated volumes of about 70,000 barrels of oil and 565 million cubic feet of gas per day in the Gulf of Mexico and onshore Louisiana. A total of 336 of its 386 structures in the Gulf of Mexico are shut in and the storm is now affecting onshore facilities. Apache says it expects to begin repopulating structures later today in the Gulf west of Lafayette, Louisiana outside the main path of the storm. The company declined to speculate on damage or a timetable for restoring production.
Swift Energy says it began hurricane shut-down procedures Friday at all of its Louisiana properties. Spinnaker Exploration shut-in daily production of some 110 million cubic feet of gas equivalent. ChevronTexaco evacuated all workers in the eastern and central Gulf of Mexico and non-essential workers in the western Gulf late Saturday. Royal Dutch-Shell, BP, Total and Exxon Mobil also evacuated offshore workers on Saturday. Pioneer Natural Resources has shut-in its production of oil and natural gas from the region, and Meridian Resource Corporation evacuated crew members. Sabine Pipe Line yesterday shut down the Henry Hub, which is a natural gas distribution center that connects to interstate pipelines. The hub was reopened by this afternoon.
Major airlines are being knocked for a loop by the one-two punch of Hurricane Katrina and oil prices briefly topping $70 a barrel. Several airports are closed and scores of flights have been canceled throughout the Gulf Coast region. In addition, the storm has caused a surge in oil prices, something the airlines have been battling for months with no end in sight. Houston-based Continental Airlines canceled 111 flights in and out of the region. United Airlines, which is currently in bankruptcy, had canceled 63 flights by midmorning into the area affected by the hurricane, and says it expects more as the storm moves north. The nation’s biggest carrier, American Airlines, canceled 36 flights in and out of New Orleans.
Retail gas prices have hit another record high over the past two weeks. The Lundberg Survey says the average price for all three grades rose nearly 13 cents to $2.65 a gallon. That follows an increase of nearly 20 cents in the prior three weeks. Retail gas prices have risen an average of 83 cents since early January. Prices could go even higher before the traditional post-Labor Day driving decline ends demands pressure. Analyst Trilby Lundberg says there could be a bigger than usual September falloff because of the higher prices. Lundberg says any major disruption to oil production facilities in the Gulf of Mexico caused by Hurricane Katrina could keep prices high even longer.
A survey of seven southern governors shows that rising gas prices are taking a bigger bite out of state budgets across the south but it’s a greater financial concern for some states than for others. The governors were interviewed during the annual meeting of the Southern Governors Association, which opened a three-day meeting at a lakeside resort in Greensboro, Georgia. West Virginia Governor Joe Manchin says the price of gas is being felt around the nation and is affecting the cost of doing business and running the state. Tennessee Governor Phil Bredesen says his state has “fairly strong reserves” and hasn’t experienced a problem yet but he added that it’s something they are paying attention to. And what will voters do in the mid-term elections next year if gas prices stay high? Texas Governor Rick Perry says he’s sure “there’ll be some political hack somewhere that will try to blame someone for something. They always do.”
The president of OPEC says the oil cartel is concerned about rising oil prices and will be looking for ways to ease prices at a meeting next month. The president, Sheik Ahmed Fahd al Ahmed al Sabah, is also Kuwait’s oil minister. His statement was carried by Kuwait’s state-run news agency yesterday on Sunday. In the statement, the OPEC leader doesn’t say what options will be considered in the September 19th meeting. However, he says oil cartel members are “becoming increasingly concerned” about the continuing high level of prices. He also says the prices are not a proper reflection of the “underlying fundamentals of the market.” Oil prices reached record highs on the New York Mercantile Exchange last week, amid concerns that Hurricane Katrina would disrupt oil and natural gas production in the Gulf of Mexico.
Attorney General Greg Abbott is warning Texans against taking advantage of Hurricane Katrina refugees. Abbott today announced his agency and local law enforcement will investigate any complaints of price gouging and false advertising. Abbott already has heard from Nacogdoches city officials of complaints about inflated rates at a motel. Thousands of refugees from Louisiana and Mississippi have taken shelter in Southeast Texas. Abbott advises persons who believe they’ve been victimized to contact his office a 1-800-252-8011 or by visiting the AG’s web site.
Despite the federal Defense Base Closure and Realignment Commission recommendation that Ellington Field should lose much of its personnel and the 17 F-16 fighters based there, Mayor Bill White is expressing optimism over prospects for the base. Mayor White says it’s a positive sign that 12 unmanned Predator aircraft will be based at Ellington as part of the Texas Air National Guard’s 147th Fighter Wing. He also had praise for last year’s agreement signed with senior Pentagon officials and Texas Medical Center representatives to relocate 2,300 Army, Navy and Marine Corp reserves to Ellington, creating a Joint Reserve Base. Ellington’s employment will more than double as a result, according to John Cook, chairman of the Ellington Field Task Force.
New Mexico has reached a settlement with a Midland company over a gas well blowout that forced evacuation of 1,200 people in Carlsbad. The March 2004 drilling accident prompted Carlsbad to ban oil and gas drilling within the city limits for 90 days, during a review of its oil and gas ordinance. A compliance ordered signed by Oil Conservation Division Director Mark Fesmire and Chi Operating President Bill Bergman requires Chi to pay the state $3,400. The fine resolves allegations of multiple violations of four operational rules. Bergman says his company appreciated working with the Oil Conservation Division and found the agency to be fair.