Free Republic
Browse · Search
General/Chat
Topics · Post Article

To: rodguy911
The two major economic problems with a huge GOM 'cane are 1) refining losses, and 2) NG production losses. Crude production losses can be (and will be, to some extent) ameliorated by drawing from SPR and increasing imports over the short term.

Refining losses due to shutdowns are inconvenient, but not a problem in any but the short term. Europe (even China, too) have excess motor gasoline available for export because of the changes in their laws over the past 3 years.

Refinery losses due to physical damage will hurt distillate prices (#2 oil, aka diesel, aka heating oil, and #1 oil, aka jet, aka kerosene) far more than motor gasoline prices because of the worldwide demand shift TO diesel for the past 2 years or so, and the future continuing shift toward it. With a lot of storm damage, motor gasoline rises perhaps $2.00/gal, but diesel might rise $5.00, with huge consequences for the economy.

Now, all of the above has to do with incurring serious production in combination with refining losses. If the refineries are (mostly) intact and down for only a short time, sure, we'll see a spike in product pricing, but it will be short-lived.

If refinery damage is minimal, NG production losses -- especially if they become severe, as in 2005 -- are more important to the economy in the medium- and long-term.

868 posted on 08/30/2008 2:46:30 PM PDT by SAJ (If Hanna gets into GOM, this is gonna get UG-LY...)
[ Post Reply | Private Reply | To 813 | View Replies ]


To: SAJ

Don’t we normally have a down spiral in gas prices as the kids go back to school in Sept.? Doesn’t demand normally drop some anyway? I wonder how that will come into play?


888 posted on 08/30/2008 3:11:10 PM PDT by rodguy911 (LAND OF THE FREE BECAUSE OF THE BRAVE)
[ Post Reply | Private Reply | To 868 | View Replies ]

Free Republic
Browse · Search
General/Chat
Topics · Post Article


FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson