|
|
| weblog/wEssays | home | |
|
Whither Oil? (October 26, 2005) 
As you've no doubt noticed, oil and gasoline have dropped in price recently. But will it last? The
answer lies in this chart. These lines display how much oil and natural gas production is still off-line
(called "shut-in" in oil-industry lingo) as a result of Katrina and Rita, compared to the effects of Huricane
Ivan in 2004.
The numbers on each vertical axis indicate how much production is still sealed off; the higher the lines, the greater the amount of oil and natural gas which remains out of production. The horizontal axis indicates time. So we can see that Ivan's toll on production was severe but short-lived; within ten days or so, only a small percentage of production was still shut-in. In contrast, Katrina and Rita wreaked such havoc on the region's pipelines and other infrastructure that almost a million barrels of oil a day and over 5 million cubic feet natural gas are still out of production--and look to remain out of production for some time. The U.S., Japan and the European Union released 60 million barrels of oil and oil products from their strategic reserves after Rita and Katrina, but the effects of that one-time flooding of the market will soon wear off. (Recall that the U.S. consumes 23 million barrels of oil a day.) And when it does, then the shortages inflicted by the loss of production in the Gulf will rear their ugly heads yet again. To quote a recent news item in the Wall Street Journal: In a sign that the recent stability in oil markets may be a temporary lull, the International Energy Agency's executive director Friday warned that petroleum supplies may start tightening again as early as next month.In other words, enjoy the cheaper gasoline while you can; it won't last. And get out those wool sweaters, because natural gas isn't going down in price, either. * * * copyright © 2005 Charles Hugh Smith. All rights reserved in all media. I would be honored if you linked this wEssay to your site, or printed a copy for your own use. * * * |
||
| weblog/wEssays | home |