Department of Energy figures out Thursday showed that nine refineries are closed and oil production in the Gulf of Mexico remains at a virtual standstill after Katrina swept a deadly path through the southeastern United States.

Three major oil pipelines connecting the south to the rest of the country are operating at vastly reduced capacity in the deadly storm's wake.

President George W. Bush, having authorised the release of emergency crude supplies to refineries, Thursday ordered a temporary waiver enabling foreign-flagged ships to carry gasoline between US ports.

"In our judgement, we view this storm as a temporary disruption that is being addressed by the government and by the private sector," he told reporters.

"Americans should be prudent in their use of energy during the course of the next few weeks. Don't buy gas if you don't need it," Bush added.

Presenting its latest tally of Katrina's impact on US energy production, the DoE said nine refineries on the Gulf Coast in Louisiana, Mississippi and Alabama were shut down and another three were running at reduced pace.

With refineries elsewhere in the United States operating at 97 percent capacity before the storm struck to cope with sky-high demand for gasoline (petrol), there is no spare capacity to pick up the slack.

"The simplest assessment of the aftermath of Katrina is that the worst possible event has occurred at the worst possible moment," Fimat oil analyst Mike Fitzpatrick said.

"As crude oil and distillate inventories continued to climb heading into the slack demand period, the one element that still laboured under terrific stress was the refining infrastructure -- and that has borne the full brunt of the storm," he said.

Combined, the nine refineries' production capacity is 1.83 million barrels of oil a day -- about 10 percent of total US output.

Refineries as far north as Illinois, Indiana and Ohio are feeling the pinch from supply shortfalls, the DoE said.

A total of 487 platforms and rigs remain evacuated in the Gulf of Mexico, which normally supplies a quarter of US crude production, new figures showed.

Overall, 90 percent of daily Gulf of Mexico crude production is shut down and 79 percent of natural gas output is halted.

The Louisiana Offshore Oil Port, which receives about 10 percent of total US crude imports, has suffered "minimal damage" but remains hampered by lack of electricity, the DoE said.

Katrina has laid bare the burdens placed on the strained US refinery system. Due in part to tougher environmental regulations and local opposition, no new refinery has been built in the United States since 1976.

"Unfortunately for many oil consumers, we will soon see what happens when a supply shock occurs when prices are already at high levels," the US Energy Information Administration said in a report entitled "The Sum of All Fears."

"But the extent to which analysts' fears are realized will largely depend on how long petroleum infrastructure remains offline," it said.

The EIA said some refineries might resume operations within a week or two, "while others will likely be down for a more extended period, possibly several months."

The fear then would be of heating oil shortages as the United States enters the winter months.

American Petroleum Institute president Red Cavaney, however, said the situation has already "significantly improved."

"There is enough (oil) inventory. It's not in the right places. Moving it around will be very critical," he said.

related report
Katrina Brings Sky-High Fuel Prices, Shortages To US
by Jitendra Joshi
Washington (AFP) Sep 01 - US petrol stations saw panic buying and lengthening queues Thursday as a summer of pain for drivers battling sky-high oil prices intensified in the deadly trail of Hurricane Katrina.

US President George W. Bush, after ordering the release of emergency government supplies of crude to hard-pressed refineries, vowed a clampdown on looters and others profiteering from Katrina's impact.

"I think there ought to be zero tolerance of people breaking law during an emergency such as this, whether it be looting, price gouging at the gasoline pump or taking advantage of charitable giving, insurance fraud," Bush said.

The president later ordered a temporary waiver enabling foreign-flagged ships to carry gasoline between US ports to keep supplies flowing.

"In our judgement, we view this storm as a temporary disruption that is being addressed by the government and by the private sector," he said.

"Americans should be prudent in their use of energy during the course of the next few weeks. Don't buy gas if you don't need it."

Rising gasoline (petrol) prices are one reason cited by pollsters for Bush's popularity ratings sinking to around 45 percent, the lowest level of his presidency.

Motorists' organisations reported average gasoline prices reaching three dollars a gallon (3.8 litres) across the United States after Katrina shut down the bulk of crude drilling and refining in the country's south.

In one part of Georgia, prices even surpassed five dollars a gallon, just seven months after gas at two bucks a gallon made headlines.

"There's a two-to-three-hour wait for gas," said Ed Quintero, a regional manager for McDonald's, as he queued to fill up his car in the Alabama town of Satsuma.

An AFP correspondent at the scene reported about 200 cars in line in Mobile, Alabama, where hurricane-hit gas stations are struggling with severe shortages of fuel and power.

More than half of the country's gasoline production comes from the Gulf of Mexico, where production at the area's 4,000-plus rigs has ground to a halt after Katrina.

Nine refineries on the Gulf Coast are shut down and pipelines from the south are operating at reduced capacity, strangling supplies of crude products such as gasoline, diesel and jet fuel to much of the rest of the country.

"We're hearing about outages driven by panic buying by motorists worried of shortages or further price increases," American Automobile Association spokesman Justin McNaull said.

"If you go to the grocery store and can't find macaroni, big deal. If you go to the gas station and can't find gas, that's a big, big issue," he said.

AAA and the American Trucking Associations have welcomed post-Katrina initiatives taken by the Bush administration to ease pump prices, including tapping the strategic crude reserve and easing environmental fuel standards.

"But there really isn't a magic wand that the government can wave to fix this," McNaull said. "We have a supply-and-demand imbalance. Until supplies are restored, as motorists we need to try to reduce demand. And unfortunately, panic buying isn't going to help that at all."

In the absence of many short-term fixes, the Bush administration is being urged to allow the building of more refineries and to enforce greater fuel-efficiency standards on America's famously gas-guzzling cars.

ATA spokeswoman Tiffany Wlazlowski said the US haulage industry, which handles nearly 70 percent of all goods transported domestically, was on course to spend 18 billion dollars more on fuel costs this year than last.

"Stories of shortages are starting to trickle in," she said. "How long this lasts depends on how long before the pipelines and refineries come back up."

related report

Oil Prices Near 70 Dollars After Devastating Hurricane
by Veronique Dupont
New York (AFP) Sep 01 - Oil prices closed higher in sight of 70 dollars a barrel Thursday as traders counted the devastating cost of Hurricane Katrina on US crude production.

New York's main contract, light sweet crude for delivery in October, rose 53 cents to close at 69.47 dollars a barrel.

On Tuesday it had hit a historic high of 70.85 dollars, a day after Katrina swept across the southern United States to leave a deadly trail of flooded communities and damaged oil installations.

In London, the price of Brent North Sea crude for October delivery went up 70 cents to 67.72 dollars a barrel, after hitting a record 68.89 dollars on Tuesday.

The market's rally came despite promises of action from the US government to keep oil supplies flowing, including the release of emergency petroleum reserves to hard-hit Gulf Coast refineries.

President George W. Bush later ordered a temporary waiver enabling foreign-flagged ships to carry gasoline between US ports to keep supplies flowing.

"In our judgment, we view this storm as a temporary disruption that is being addressed by the government and by the private sector," he told reporters.

"Americans should be prudent in their use of energy during the course of the next few weeks. Don't buy gas if you don't need it."

But US motorists' organizations reported panic buying and shortages at petrol stations, with nine major refineries on the Gulf Coast shut down by Katrina and pipelines from the south operating at sharply reduced capacity.

Combined, the nine refineries' production capacity is 1.83 million barrels of oil a day -- about 10 percent of total US output.

"We still have to get refineries up and running," Refco analyst Marshall Steeves said.

"Some power has been restored and the LOOP (Louisiana Offshore Oil Port) has tried to accept deliveries today. But many refineries are still flooded," he said.

"There are a lot of tankers carrying gasoline from Europe but it'll take time to come," Steeves added.

The government is preparing to deliver oil from its 700-million-barrel Strategic Petroleum Reserve to at least two companies -- Exxon Mobil, which wants six million barrels, and Valero Energy, which needs 1.5 million barrels.

"With the reserve fully operational, we will be able to start delivering this oil as soon as tomorrow (Friday)," Energy Secretary Samuel Bodman said in a statement.

But traders queried how much use the SPR will be at a time when many flooded or power-starved refineries simply cannot process any oil at all.

"The only refineries that could use it are the ones who are up and running and working, and every day (that) another refinery closes is just another million-barrel loss for the market," said Veronica Smart, analyst at the Energy Information Center.

"We'll see prices a lot higher as we approach the winter," when demand for heating fuel peaks, she added.

According to US government data, the hurricane has shut down an estimated 90 percent of crude production and 79 percent of natural gas output in the Gulf of Mexico -- which accounts for a quarter of total US oil output.

"This disaster has come at possibly the worst time with US refineries already working flat-out to produce products to meet high demand, putting more pressure on the rest of the refineries and increasing their chance of breakdown," Sucden analyst Sam Tilley said.

Crude prices have shot up by more than half since the start of 2005, continuing a dramatic run from last year as the world's thirst for oil soars on the back of strong growth, particularly in China and the United States.

Meanwhile, threats by trade union protesters to disrupt Nigeria's crude oil exports as part of a campaign against a recent domestic fuel price hike will keep prices bubbling, analysts said.

Nigeria is Africa's biggest oil producer and the world's ninth biggest exporter.

Community
Email This Article
Comment On This Article

Related Links
SpaceDaily
Search SpaceDaily
Subscribe To SpaceDaily Express
Powering The World in the 21st Century at Energy-Daily.com

Memory Foam Mattress Review

SPACE MEDIA NETWORK PROMOTIONS Solar Energy Solutions Tempur-Pedic Mattress Comparison ... Newsletters :: SpaceDaily :: SpaceWar :: TerraDaily :: Energy Daily XML Feeds :: Space News :: Earth News :: War News :: Solar Energy News