WSJ: Damage to Oil and Gas Facilities Pushes U.S. Closer to Energy Crisis

[question everything]

Damage to Oil and Gas Facilities Pushes U.S. Closer to Energy Crisis

By RUSSELL GOLD and THADDEUS HERRICK
Staff Reporters of THE WALL STREET JOURNAL
September 2, 2005; Page A1

Hurricane Katrina's continuing disruption of a substantial portion of the Gulf Coast's vast network of refineries and pipelines is pushing the U.S. closer to a 1970s-style energy crisis, straining the oil industry's ability to deliver gasoline from Florida to Colorado, sending prices into uncharted territory and triggering panic among drivers in some areas. Long gas lines were reported in Denver, Indianapolis, Hartford, Conn., Atlanta and Orlando, Fla., among other cities. In Charlotte, N.C., between 13% and 15% of stations had no gasoline and prices have soared as much as 70 cents a gallon in those stations that still have fuel to peddle, said Tom Crosby, a local AAA official there.

President Bush took the unusual step yesterday of urging Americans not to buy gasoline if they don't have to. "Americans should be prudent in their use of energy," he said in brief Oval Office remarks. "Don't buy gas if you don't need it." The president also made it easier for tankers to bring in gasoline from Europe, which has excess capacity for the fuel as motorists there increasingly buy diesel-powered cars. Wednesday, Mr. Bush temporarily lowered U.S. environmental standards that also eased the way for European gasoline.

(snip)

"In terms of the scale and impact on the American market, this is comparable to the oil embargo" of 1973 and 1974, said Jay E. Fakes, head of the federal Energy Information Administration from 1993 to 2000. The only answer, he says, is immediate conservation. His call for drivers to cut back was echoed by such oil-industry heavyweights as the American Petroleum Institute and the Petroleum Marketers Association of America.

The industry's ability to snuff out the gasoline-price spike is critical because if the crunch persists, it has the potential to significantly slow the U.S. and global economies or even trigger a recession... But signs of stress are emerging. Home values may be peaking. The government reported yesterday that the personal-saving rate dipped into negative territory for just the first time since the weeks after the Sept. 11, 2001, terrorist attacks, suggesting consumers are going into debt to support their spending habits. A sustained gasoline-price shock, many economists warn, could help tip the economy into a recession.

(snip)

While the triggering event for the country's energy squeeze was the destruction Katrina unleashed on the vital gasoline-producing region of Louisiana and Mississippi, the scene was set for this catastrophe by both drivers and the energy industry. U.S. drivers pump 11% of the world's crude oil into their tanks in the form of gasoline, and increasingly over the past couple of decades they have been buying gas-guzzling SUVs and pickup trucks.

(snip)


--Chip Cummins and Steve LeVine contributed to this article.

Write to Russell Gold at [e-mail] and Thaddeus Herrick at [e-mail]

URL for this article:
http://online.wsj.com/article/0,,SB112557875843929032,00.html (subscription)

[LiberalEsto]

1. I can practically hear the champagne corks popping

at the Oil Execs Country Club.

[FloridaPat]

2. Not happening. 20-25% of US oil production is gone and may not

come back. This may be the beginning of the end. If he's right, all the parties are over.

" As many as twenty offshore rigs have now been confirmed as adrift, capsized, listing or sunk. Each rig may have as many as eight wells. Where’s the money coming from to replace them? How long will that take?

Bottom line: my assessment is that New Orleans is never going to be rebuilt and that US domestic oil production will never again reach pre-Katrina levels. The infrastructure is gone, the people are gone, and the US economy will be on life support very, very quickly. If people are griping at $5.00 gasoline what will they do when it’s $8.00? $10.00? Start shooting (the wrong people)? How difficult is it to rebuild in that kind of social climate? And if US oil production does not soon exceed pre-Katrina levels then the US economy is doomed anyway. It’s a catch-up game now. I think it’s quite likely that the Bush administration is responding so ineptly in part because it is in a complete crisis mode realizing that the entire United States is on the brink of collapse and there’s very little they can do about it. The Bush administration doesn’t know how to build things up, only blow them up. They aren’t worrying about New Orleans because they’re frantically triaging the rest of the nation and deciding what can be saved elsewhere. "

http://www.fromthewilderness.com/free/ww3/090205_bet_life.shtml

[question everything]

3. Indeed, and the economy has started slowing down

New Orleans epitomized what happen to a service economy - 2/3 dependent.

Many of the jobs there were in the service industry - tourism and visitors. These are gone and, in contrast to the old manufacturing economy, people cannot just move to the next city to find another assembly line job.