Fuel Supply Concerns!!!

[Hawkered]

If you are anywhere in the USA and flying now, maybe you should consider fueling to the lesser of your restricted takeoff weight by runway length or your maximum landing weight tonight when you are done flying!

I have just been speaking with a Police Officer in Florida who has advised that nationwide fuel rationing could occur when the refineries of New Orleans and Houston and the oil platforms of the entire Gulf become inoperative.

 

[Flying Illini]

Sorry for being skeptical, but is this police officer the final authority on this or was he just sharing an opinion? (It may be true if things get as bad as they may get, but I don't know that I would go by the word of a single police officer in FL.)
Of course, on that note my wife and I just went and filled up our vehicles before prices start to rise. I didn't even consider the possibility of rationing.

 

[Hawkered]

Certainly nothing official, simply an opinion, but based on some astute observations. When Katrina came over the Keys this last week, almost half of the refineries were shut down for safety reasons in South Florida, according to this same officer. He was also on the beat to enforce the State of Emergency after Hurricane Andrew. I think his concerns are echoed by every news organisation in the country right about now..who knows maybe this is why he believes it to be likely.

 

[gray eagle]

Do Not Know If It Means Rationing, But

Oil and natural gas prices to take a hit, analysts say

By TOM FOWLER
Copyright 2005 Houston Chronicle

Oil and natural gas prices are expected to spike today after Hurricane Katrina shut down energy production that's key to the country's supplies.

Katrina's tear through the central Gulf of Mexico struck at the heart of a region that accounts for more than a quarter of U.S. domestic oil and natural gas production.

Companies operating in the area shut down much of their production as they evacuated thousands of workers from rigs beginning late last week. How long that production stays offline won't be known until companies can fly crews out over the Gulf late today or early Tuesday.

"The markets will treat it like it's Tyrannosaurus rex, but bigger," said David Pursell, an energy analyst with Houston's Pickering Energy Partners.

Likely signaling what's ahead, Sunday night, when electronic trading resumed on the New York Mercantile Exchange, crude oil futures spiked $4.50 per barrel, putting the cost above $70 for the first time since oil began trading there in 1983.

Bad memories of Ivan

The storm's severity has many worrying the damage could be as bad as that caused by Hurricane Ivan last September. More than 80 percent of the Gulf's oil and 50 percent of its natural gas production was knocked out when platforms were damaged or destroyed, floating rigs broke free of their moorings and pipelines were snapped by undersea landslides.

Oil prices jumped more than $10 per barrel after Ivan and full recovery took months. The federal government eventually authorized opening the Strategic Petroleum Reserves to make up for supply shortfalls.

"If this hits as hard as Ivan, I can assure you it will have a bigger impact on prices this time with demand at all time highs and supplies so tight," said Fadel Gheit, an oil and gas analyst with Oppenheimer & Co.

Higher gasoline prices could follow if onshore refineries aren't able to restart quickly or continue their oil shipments from the Gulf.

Amy Myers Jaffe, associate director of the energy program at Rice University's Baker Institute of Public Policy, has been saying for months $80 oil was possible by year's end.

"I was thinking $80 by Thanksgiving, but this could change things," she said.

The storm could have broader economic impact, with stock markets likely to be down Monday in reaction to the higher energy prices, Gheit said.

And damage to insured property other than oil and gas rigs could range from $15 billion to $30 billion, according to a preliminary estimate from EQECAT, Inc., a risk modeling company. The storm did an estimated $1 billion to $2 billion in damage in Florida when it hit that state Thursday, the company said.

Thousands go ashore

Oil and gas companies began preparing their offshore sites for evacuation late last week, ferrying thousands of workers to shore by helicopter and boat.

ChevronTexaco, for example, evacuated 3,000 workers from the Gulf and planned to shut down most of its production, including platforms that can be operated remotely from land, spokesman Matt Carmichael said.

The company evacuated its New Orleans offices and set up its emergency recovery operations in Sugar Land.

And Shell Oil evacuated nearly 1,000 workers from the Gulf, shutting about 420,000 barrels per day of oil production and 1.3 million cubic feet of gas production.

While energy companies were well prepared for Katrina over the weekend, energy traders were less so.

Despite hitting new records last week, oil and gas prices closed down Friday because of forecasts that had the storm avoiding most of the sensitive offshore production areas.

Oil fell $1.36 to $66.13 a barrel on the NYMEX in regular trading Friday while natural gas closed down 21.4 cents to $9.77 per million British thermal units.

But late Friday and early Saturday it became clearer that Katrina could be a bigger problem, Jaffe said.

"If companies really had a grip on what the storm could do they would have spent Friday buying replacement oil," and thus prices would have climbed, Jaffe said.

How high prices go and how long they stay there depends on several factors, including how badly production rigs have been damaged, whether undersea oil and gas pipelines are damaged and when refineries onshore are able to resume operations, Pursell said.

"There's a lot of refining capacity that's been shut down in the path of this storm, but they won't come back up unless they have reliable power supplies," he said.

Worries about winter

ConocoPhillips shut its 247,000-barrel-per-day Alliance refinery south of New Orleans and evacuated staff. Valero Energy Corp. planned to shut down its St. Charles refinery, Chevron shut its refinery in Pascagoula, Miss., and Motiva said Sunday it was shutting down its Convent and Norco, La., refineries until the storm passed.

Refineries spent more time and capacity this summer making gasoline in order to take advantage of the high pump prices, instead of beginning to build stockpiles of heating oil for the winter months.

Natural gas inventories are lower than usual heading into the highest demand time of year.

Jaffe said consumers have adapted to high gasoline prices this summer by curtailing driving habits, but if heating oil and natural gas prices continue to rise into winter consumers could find it harder to adapt.

The Associated Press and Bloomberg News contributed to this report.