U.S. oil surges $4, to record above $70, on hurricane

reuters.com ^ | 28 August 2005

[lauriehelds]

SINGAPORE, Aug 29 (Reuters) - U.S. crude oil futures surged more than $4 in opening trade on Monday, hitting a new record high above $70 a barrel after Hurricane Katrina forced Gulf of Mexico producers to shut in more than a third of their output.

Katrina, which strengthened into a rare, maximum power Category 5 hurricane as it spun through key oil and gas fields toward New Orleans, shut in a total 633,000 barrels per day

(bpd), according to company figures on Sunday.

It also forced the closure of seven refineries and a major U.S. crude import terminal.

Crude oil futures on the New York Mercantile Exchange

(NYMEX) surged as high as $70.80 a barrel, up $4.67 a barrel, as traders feared lasting damage could further strain an industry that has struggled to keep up with demand for two years.

[atlanta67]

have you ever read an economics text book...why dont you google "negative externality" and youll see how foolish you were to make such a post

[the invisib1e hand]

yaddayadda blah blah blahdiddy-blah-blah!

oh enough already.

[jbstrick]

Don't be so short sighted. If a production platform breaks it's mooring and floats off. It will cost millions if not hundreds of to repair and place that platform back into production.

[atlanta67]

i won

[Eric in the Ozarks]

Nationalization ? Perhaps you should ask the shareholders how they feel about you solution.

[jec41]

If they try to do that again, the oil companies WILL be nationalized.

Most oil companies are already nationalized by the countries that own the oil. The oil contracts that just hit $70 a barrel are for Mexico crude. They are already nationalized by Mexico. We import 60% of our crude from countries that have already nationalized their oil. Are you ready for a world war to make them sell it cheaper to you than what other people are bidding and willing to pay.

[ConsentofGoverned]

"The US consumes about 25% of the world's oil production."

Yep and we protect 75% of the world from dictators and
totalitarian governments..we feed the third world..USA gives the most charity to world poor..US military has biggest role in most large scale natural disasters on and on just think what we could do using 50% of world oil

[jbstrick]

""WHY should the price of crude oil go UP just because a few locations shut down??"

Are you kidding? Oil is a commodity market and thus pricing is always on future value not present.

Another thing to realize is the New Orleans facility is the ONLY us facility capable of offloading crude from a supertanker.

This along with 200 or so platforms unable to produce product product cause a price spike.

Lets avoid the stupid "Just to make a profit" argument and try to understand that the American people's complacency is the cause of this problem. We should demand that US oil companies be allowed to explore new energy reserves and expand refining capacity. Along with huge tax breaks for researching alternative energy sources.

[gpapa]

Boy, there are a lot of big oil bashers on this thread. The performance of all the major oil companies follows. Since the area threatened by the hurricane in the Gulf produces and refines 25% of the domestic oil & gas consumed in the USA, you bet the price of oil & gas is going to be affected. Futures have been bid up to $70 on the NYME this evening. Big Oil is going to lose money from this Hurricane if it passes at CAT5 thru the Gulf. Older rigs could be snapped like toothpicks. The suggestion from some about reintroducing price controls, like the stupid attempt in Hawaii is ridiculous. Have we forgotten the long gas lines, 18% interest rates, and 13 % inflation rates of the early '70s. Releasing oil from the Strategic Petroleum Reserve will do nothing to affect the price of gasoline. The USA and its world suppliers do not have enough refining capacity to convert that oil to productive use. Get ready for $4.00+ gasoline. Do not expect a fickle Congress in Washington to help either. Their boondoggle $12.8 billion Energy Bill was a waste of time. The huge Transportation Bill of $187 billion puts the nail in the coffin. Those two combined average out to about $986 per person, children included, in the USA. We would be better off if they took that money and gave it back to taxpayers to spend on their own transportation.

Major Integrated Oil & Gas
Market Capitalization: 1,378B
Price / Earnings: 10.0
Price / Book: 3.0
Net Profit Margin (mrq): 9.0%
Price To Free Cash Flow (mrq): 44.2
Return on Equity: 27.6%
Total Debt / Equity: 0.0
Dividend Yield: 2.9%

[Renegade]

"Nationalization ? Perhaps you should ask the shareholders how they feel about you solution."

What do you think of the Eminent Domain decision ? Think it can't happen ? BTW ,I sold some oil stocks to get cash to buy gas for my SUV and F-150 4x4.

[mylife]

The source is me. Its a possibility.
The reserves are for emergencies.
Im not saying it will happen Im just saying its a possibility Personally If I was in charge I wouldnt use it to alleviate prices

[atlanta67]

we consume 25% of the worlds energy and produce 33% of the world's GDP....pretty good

[atlanta67]

""Another thing to realize is the New Orleans facility is the ONLY us facility capable of offloading crude from a supertanker.""

is this accurate?? you mean there is no facility on the east coast or in Houston

[jbstrick]

"These gas companies made record profits in the 1970's during the energy crises"

What is the source for your assetion?

[jbstrick]

"These gas companies made record profits in the 1970's during the energy crises"

What is the source for your assetion?

If I remenber correctly the problem was caused by the government imposing false market price caps.

[Momaw Nadon]

Wasn't there a made for TV movie about this sort of thing happening?

[atlanta67]

yup appeared on FX....oil eventually hit $150 per barrel.

[combat_boots]

"Boy, there are a lot of big oil bashers on this thread."

And here I was getting a warm and fuzzy thinking about the 27 cent per gallon gas I paid in Tampa back in the day. Pre-ME crap, of course. 27 cents per gallon was cheap, even then, but boy, it was sweet.

Big oil hasn't been exactly frugal, forward thinking in pushing alternate engine technologies, or forthcoming in its collective collusion of historic tendencies toward price fixing, or, panic.

[jec41]

50 million or so barrels will hold off the speculators tomorrow....but he must act before the markets open.

Good!!! Go by the reserve in the AM and fill up. Don't even bother about try to find somewhere to refine it because the refinery in NO will be under water and so will some of the reserves in LA and TX.

[xrp]

I think your source SUCKS!