Gasoline, Oil and Natural Gas Prices Surge
The drivers appear to be the shut down of 11 refineries along the gulf coast, the decrease in crude oil stockpiles. As for natural gas the increase in prices is due to the strengthening of a tropcial storm in the Carribean.
Eleven refineries along the Gulf of Mexico are closed because of Rita and Katrina, which struck last month. Offshore oil output in the Gulf remains shut. Prices extended gains after the Energy Department reported that gasoline supplies rose 4.4 million barrels to 199.8 million in the week ended Sept. 23. Crude-oil stockpiles fell more than expected, the report showed.
Natural gas surged to a record on concern that tropical weather may cut production that has been crippled by two hurricanes in the last month. The U.S. National Hurricane Center said today that a “vigorous” tropical system in the Caribbean Sea was strengthening. So-called tropical waves can mark the beginnings of a hurricane.
According to the Department of Energy, 7 refineries accounting for 1.7 million barrels per day of refinery capacity were in the directly in the path of the hurricane and damage to these facilities and the lack of electricity are keeping others offline. In short, about 15% of the U.S. refining capacity is now offline (which speaks rather well of my shirt cuff calculations). The following graphic gives you an idea of the magnitude of what we are talking about,
According the Deptarment of Energy’s daily report a large number of natural gas processing facilities are offline.
Over a dozen gas processing plants have confirmed that they are off-line owing either to flooding, lack of supplies, an inability to move stored liquids, or safety precautions (see September 26 Report).
The combined capacity of the plants that are offline is around 10 billion cubic feet per day. Definitely not a good thing for those who heat their homes with natural gas and with winter coming on fast.