Monday PM September 1st, 2008

Oil prices fall despite Hurricane Gustav, but gasoline prices rise…Drillers anxiouis to inspect offshore infrastructure…Gustav keeps General Motors Onstar service busy…

Oil prices have fallen. This, as forecasters reported a weakening of Hurricane Gustav. A stronger dollar also helped reverse course for oil prices. They had risen nearly $3 to over $118 a barrel earlier in the day. Prices in Asia had risen above $116 a barrel on expectations that the storm would damage drilling and refining operations in the Gulf of Mexico. But late afternoon prices in Europe were around $110 a barrel. The average retail gasoline price in the U.S. was up slightly to almost $3.69 a gallon for regular, according to AAA. Gasoline prices peaked on July 17th at about $4.11 a gallon.

Early reports indicate Hurricane Gustav appears to not have inflicted significant damage to offshore drilling rigs and production platforms. Companies had moved some self-propelled rigs out of the way ahead of Gustav, but moored rigs were left in the path of the storm. Companies are able to track the positioning of rigs by satellite. But they will soon move to visually inspect the structures. Rigs have been evacuated in recent days, as the storm approached the Gulf. Workers could be back on the rigs and platforms as early as Wednesday. Restarting offshore rigs and platforms and refineries onshore will take a few days.

In the low-lying Louisiana bayou area where forecasters predicted Hurricane Gustav would make landfall, people are largely without levees. A federal levee plan to protect Houma and the surrounding towns has never gotten off the ground. Most of Houma is protected by drainage levees about ten feet tall. Louisiana State University geologist Roy Dokka, who conducted a recent survey of levee heights in southeastern Louisiana, says “Houma is just sitting there naked.” A combination of factors–oil drilling, hurricanes, river levees and damming of rivers–have destroyed marshes and swamps that once flourished in the river delta. The U.S. Geological Survey says about 900 square miles of coastal land has disappeared since the 1950s.

Hurricane Gustav has been keeping General Motors’ Onstar service busy. Thousands of people trying to outrun the storm were calling Sunday, asking about the fastest path out of the Gulf Coast, how to get around clogged evacuation routes and where the closest hotels with vacant rooms were. Some callers were trying to find loved ones who were on the road. Onstar beefed up its staff and put emergency plans in place at three call centers in Michigan, North Carolina and Canada. Specially trained call-takers were armed with computerized maps, databases of hotels and even locations of Red Cross emergency shelters. Managers say Onstar was getting more than 3,000 calls an hour from people who subscribe to the service.

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