Red-Hot Resources

"Luck is not chance, it’s toil; fortune’s expensive smile is earned.”

Thursday, September 11, 2008

Hurricane Can't Whip Up Higher Prices

Oil continues to look bearish, especially as it is not rising even as a new hurricane bears down on the Texas Coast. This track is especially alarming because the projected path has shifted north and east in the last 24 hours. If that track continues to shift, the impact on America's oil, gas and refining capacity could be extreme.
Within the storm path lies about 5 million barrels per day (bpd) of US petroleum refining capacity. To put that in perspective, 5 million bpd is about 30% of US capacity, and a bit less than 6% of global capacity (about 85 million barrels per day)
Also, the MMS reported Wednesday that staff has been evacuated from 452 production platforms (63%) and 81 rigs (66.9%). Finally, 95.9% of Gulf oil production and 73.1% of natural gas production has been shut-in as a precautionary measure.
And yet oil goes down. I’m not saying the market is wrong. But obviously the market is predicting our oil use is about to fall off a cliff.


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