View of part of the Fujairah Corniche and the Hajar Mountains in the Background

Monday, September 1, 2008

Gustav Affecting Oil Flow and World Oil Prices

Even before Hurricane Gustav struck land around the Gulf of Mexico it has had an enormous impact on the oil industry, including the price of oil in the world.

According to Reuters, the Gulf is the source of 25 percent of domestic oil and 15 percent of the natural gas. More than a third of U.S. refining capacity is on the U.S. Gulf Coast.

The ports of New Orleans and South Louisiana (which is the largest U.S. port in tonnes handled) have been effectively closed.

The U.S. Minerals Management Service said Sunday 1.25 million of 1.3 million barrels per day (bpd) of oil production (96.3 percent) and 6.1 billion of 7.4 billion cubic feet per day of gas (Bcfd) production (82.3) had been shut in anticipation of Gustav.

People have been evacuated from oil production platforms and drilling rigs. There is great fear being expressed as to the damage that Gustav might do to the US oil rigs.

Crude oil around the world has surged over $2 a barrel to more than $117 a barrel in trading on Sunday.

Ports such as the Louisiana Offshore Oil Port, which is the gateway for half of America’s imported oil, stopped unloading ships Saturday and has shut the flow from storage on Sunday.

Dr Geoff Pound

Image: The Gulf of Mexico accounts for a quarter of US oil production. (Photo courtesy of AP)