STORM2K

Oil Soars to Record as Hurricane Shuts U.S. Gulf Production



Aug. 29 (Bloomberg) -- Crude oil soared to a record $70.80 a barrel in New York after Hurricane Katrina moved into production regions of the Gulf of Mexico, forcing companies including Exxon Mobil Corp. and Chevron Corp. to shut operations.

Royal Dutch Shell Plc said it shut 420,000 barrels of daily oil production in the Gulf. The Louisiana Offshore Oil Port, which handles about 11 percent of U.S. imports, closed Aug. 27. Katrina, with 165 mile-an-hour winds, is one of the most powerful storms ever to enter the Gulf, source of about 30 percent of U.S. oil production and 24 percent of the country's natural gas.

``Forecasters are saying Katrina could do more energy damage than any storm in recent years,'' Jason Schenker an economist with Wachovia Corp. in Charlotte, North Carolina, said before the start of trading. ``It's not just that there's going to be outages for the next couple of days. With shutdowns and damage at platforms and refineries, the bullish impact could be felt for the rest of the year.''

Crude oil for October delivery rose as much as $4.67, or 7 percent, to $70.80 a barrel in electronic after-hours trading on the New York Mercantile Exchange. It was at $70.50 a barrel at 7:05 a.m. Singapore time.

The October contract dropped $1.36, or 2 percent, to close at $66.13 a barrel on Aug. 26. Prices fell last week amid forecasts that Katrina would stay closer to Florida and miss most producing regions of the Gulf. The previous record of $68 a barrel was reached on Aug. 25 as the storm gained strength.

Natural gas gained as much as 23 percent to $12.03 per million British thermal units.

I'm moving this to Off Topic, while this IS a valuable thread, it needs to be elsewhere.....not here!

Dennis

NOW.....YEP, you can BET your bippy that by Weds or Thurs of this coming week, we'll see oil at $100 a bbl.......take out your wallets and assume the position, it's going to be BAD for those of us lucky enough to survive the storm

It's a crying shame to see SO many people not LEAVING NOLA, I know MOST of those "Left Behind" don't have a choice.

Dennis

This is also going to cause the Dow to take a big hit tomorrow.
Watch your pensions.
irina

I knew the sh** would hit the fan when I heard that 25% of our oil production would be lost from Katrina. I think prices will keep rising all week Gas shortages to come?

Full capacity took six months to come back with much "weaker" Ivan. I cant believed I called Ivan weak.

Just gotta beat on my old worn-out gas price vs. supply "tom-tom": Yessir, they'll jack the barrel prices to the moon (Alice ), and we'll get our ears full of... well, full of sad tales about supply, shipping, production. Very sad, actually . HOWEVER... You will still be able to go anywhere outside the obviously storm-damaged areas and buy all of the gas that you want. No rationing, therefore no credibility in their excuses for gouging the crap out of us (again). Before, it was the seasonal brainwashing - where we were conditioned to pay more at the busiest driving seasons (again, all the gas you want) under the guise of "tight supplies" and "increased demand". Now it seems - literally - that the wind can change direction and prices leap up.

On a side note, maybe from the "Peanut Gallery", a friend claims that "the military" has made a huge breakthrough in hydrogen-powered vehicles. I'm not sure if they meant in the technology of the vehicles or in the production of the hydrogen itself. Anyways, the thinking is that this is why we are seeing the "drop of a hat" price gouging - that this is basically the early, but still dying days of the industry. ONE CAN ONLY HOPE.

Here something else to add to the mix.

(KCBS) SAN FRANCISCO - Problems at two major Bay Area oil refineries, along with worries over Hurricane Katrina, have one energy analyst predicting a big jump in gas prices this week. A cat cracker at the Tesoro Golden Eagle Refinery in Rodeo broke down on Wednesday, knocking out 40-percent of the plant's production. That has Chris Mennis, an energy trader based in Aptos, anticipating a 15-cent increase in Bay Area gas prices. "Cat crackers are big gasoline units," Mennis told KCBS reporter Henry Mulak. "There was some pretty significant damage done that I have heard could take from three to six months to repair."

In addition, Mennis said Hurricane Katrina could knock out some production in the Gulf of Mexico, putting even more pressure on the market. "If that hurricane changes direction and starts to dodge west, and land falls around say New Orleans, then we got a problem," said Mennis. New Orleans was evacuated on Sunday morning in anticipation of a landfall with winds reaching up to 175mph.

Besdies any damage caused by the weather system, Mennis said the refinery problem would on its own raise prices that normally fall with the drop-off in consumption that comes at the end of the summer driving season after Labor Day. "It's one of many refineries," said Mennis, "and when you lose a 70,000 barrel-a-day cat cracker, that's a pretty significant loss." The statewide average rose to 2.80 a gallon this past week, meaning the average could hit three-dollars soon.

Mennis said gas prices in California are notoriously sensitive to refinery problems because they are producing at their capacity. "These refineries are running full tilt. These refineries were all built in the 50's, and these things are just rattling to pieces," he said. Shell Oil Company's Martinez Refinery also suffered problems, according to Mennis, although the company has not confirmed his report.
Source

Schools feel pinch of fuel prices

Districts struggle to cut costs, consumption to balance tight budgets

By KIM BREEN / The Dallas Morning News

Pity the school bus.

At 8 miles per gallon or worse, even Hummers earn mileage envy from buses.

And as fuel prices continue to skyrocket, the pressure’s on to savor every last drop of diesel.

Gone are the days when well-meaning bus drivers could make extra stops to drop students at their driveways.

And there will be no more waiting in a running bus for the field trip to wrap up.

“We practice responsible idling,” said Andrew Forrester, director of transportation for the Plano school district. “My goal is to live within my budget, whatever it takes.”

Soaring energy prices are forcing school districts around the region to ratchet up fuel budgets in a year when Texas schools have little money to spare.

The Plano district has tweaked bus routes to cut the number of stops to improve vehicle mileage.

Carrollton-Farmers Branch has replaced some air-conditioning equipment to improve efficiency.

Districts across the country are feeling the pinch and looking for ways to cut costs and consumption, said Ron Skinner, director of government and public affairs for the Association of School Business Officials International. In a recent informal survey, 96 percent of members who responded said rising fuel costs were adversely affecting their districts.

“It’s a smaller part of the district’s budget than something like health care, but it still can have a huge impact when the prices go up,” he said.

Similarly, cities also are feeling the heat and are keeping offices a little warmer this summer or buying hybrid vehicles with high gas mileage.

The shock is hitting some school systems hard.

Just before the Carroll school district approved its 2005-06 budget last week, staffers scrambled to add tens of thousands of dollars to its transportation fuel budget because of rising costs. The final result: a 53 percent increase in that fuel budget from last year, to $235,000. Other budgeted utility costs shot up $200,000 to $3.4 million.

‘Year of unknowns’

“It’s just a year of unknowns,” said Harry Ingalls, the district’s assistant superintendent for operations.

Districts are dealing with two wild cards — the volatile energy market and uncertainty about the future of the state’s school finance system, which is the subject of litigation pending before the state supreme court.

What school districts do know is that expensive fuel is forcing them to retool many parts of the budget.

“It affects things like extracurricular activities,” Mr. Ingalls said. “Every year we have kids transported all over the state of Texas.” Sending band members and football players to Abilene, for example, takes 11 charter buses and a lot more money this year.

In the Rockwall district, officials cited fuel costs as part of the reason they increased lunch prices this summer. Rising petroleum prices affect the cost of producing plastic cutlery and trays, for example, officials said.

The fuel budget for the Denton district was set months ago at $512,000. Even if prices stop rising, the district could wind up spending $150,000 more for fuel than it anticipated, forcing officials to find the money elsewhere, said Gene Holloway, director of planning and transportation for the district.

As he monitors news about the industry, “I get white-knuckled,” Mr. Holloway said. “I get very nervous.”

He said inadequate state funding already caused the district to drop 1,500 students from its bus rolls a couple years ago after it increased the minimum distance students must live from school to qualify for free rides.

“It was truly a choice between gasoline and teachers,” he said. (The longer distances put Denton in line with state regulations, which most other districts also now follow.)

Mr. Holloway said Denton is also paying more for vehicle parts and other transportation expenses this year as suppliers pass along their own fuel price increases. Tight money is also forcing his department to put off bodywork and other nonessential work, such as installing new video surveillance equipment.

The Duncanville district began curtailing transportation as fuel prices started to rise.

Field trip limits

“We’re continuing a restriction on field trips to the metroplex only,” spokeswoman Tammy Kuykendall said. “Only two field trips per grade level per year will be allowed.”

The district budgeted $67,315 for fuel last year but spent $138,589. Ms. Kuykendall said the district had enough money in other areas to cover the overage.

Not everyone has been blindsided by fuel price increases.

“We saw it coming,” said Deanne Hullender, public information director for Dallas County Schools, an agency that provides many services, including transportation, for area schools. It contracts with nine of 14 districts in the county, including the Dallas district, for busing and transports 45,000 to 50,000 students a day.

When fuel prices shoot up, the agency passes costs along to clients. But last year’s price hike was steep enough to soften the blow this year. The Dallas district, for example, paid the agency $1.4 million in 2003-04 for fuel and budgeted $2 million in 2004-05, but expects this year’s cost to rise less than 3 percent.

All schools get tax breaks on fuel, and benefit from buying in bulk. Some also have locked in prices with utilities for specified periods of time to help keep costs low, which is what the Dallas district has done with its electricity and natural gas providers, district budget director John McGee said. The district’s electricity budget increased from $17 million to $20 million this fiscal year, but electricity and gas rates are locked until December 2006.

The Carrollton-Farmers Branch school district added 20 percent — $1 million — to its electricity budget for the 2005-06 fiscal year. That’s just to cover fee increases; the district hopes consumption will actually drop.

The district encourages conservation in the classroom, but Mark Hyatt, assistant superintendent for support services, said the biggest reductions come from updating equipment to make air conditioning more efficient.

Outsourcing bus service to Dallas County Schools has also saved money, he said.

C-FB, like other districts, eliminates costs where it can to make up for higher energy costs. A couple of years ago it cut back on custodial services. Floors don’t get mopped as frequently as they once did.

A common strategy

It’s a common strategy, said Mr. Skinner of the business officials organization. Maintenance is often the first to suffer. It’s not like schools can go without utilities.

In his group’s survey, many respondents said they were trying to conserve fuel by rerouting school buses or reconsidering trips other than those to and from schools.

Some were looking beyond budgetary solutions.

“I see ‘praying’ listed,” he said.

Staff writers Herb Booth and LaKisha Ladson contributed to this article.

Filled up the tank this weekend. Had to starve my piggy bank though in order to do it.

I just waited in line for nearly twenty minutes to get gas here. Three stations in town are still @ 2.44, but the rest have jumped to $2.56! The gas station attendant who was out directing traffic this evening said she has heard "speculation" from management that gas may climb over $3.00 here by the end of the week. We have some of the cheapest gas in the nation. I can't imagine what this will do to everyone else.

GalvestonDuck wrote:Filled up the tank this weekend. Had to starve my piggy bank though in order to do it.

ROFLMBO....AND, it's THIS TOO

Dennis

GalvestonDuck wrote:Filled up the tank this weekend. Had to starve my piggy bank though in order to do it.

I needed that one...

Looks like $4 a gallon gas will soon be at a pump near you

I ran an errand at my local Kroger store last night. Saw very long lines for gas at their pumps. So long, they were tying up the usual flow of traffic in the parking lot (why they placed the pumps so close to a main 'road' in this parking lot/towne center is a mystery to me). Since I buy gas elsewhere and I was below a half tank, I thought maybe I should top it off. Drove a block up the street to my local BP, and sure enough, long lines there as well. And a cop stationed inside, near the registers. I live in a safe area too - not generally known for robberies........

Just an odd coincidence after Katrina hit? Not so sure now!

Mary

Do y'all think we could suspend the kvetching about gas prices for a few days? Seems to me that with thousands of people flooded out of their homes or even dead, that we should be on our knees thanking God that not only are we still alive, but still have our property and our cars that we gripe about so much.

Jen.......I hope you don't mean we don't CARE about those who are homeless, the deceased, we DO. MILLIONS upon MILLIONS of prayers HAVE been said and I'm SURE they will continue JUST as you suggested, however, this is MORE than just "gripping, sniveling" about gas prices, it's a fact of life that things are GOING to get WORSE, might even send the economy into a recession (pure speculation on my part of course) that's all.

One thing I DON'T understand, first they said prices would go up .10 a gallon, then it went to 10-15 cents, now this morning, be prepared for 25-30 cents a gallon, don't understand? Actually, I do but I will remain silent out of respect for those lost!

Dennis

Jen, you're right. The focus should be on those that lost lives, homes, businesses. We'd gladly pay a little more for gas and wait in long lines, if Katrina had never happened. Well, at least I would.

Thanks for putting it another way.

mary

Brent wrote:

GalvestonDuck wrote:Filled up the tank this weekend. Had to starve my piggy bank though in order to do it.

I needed that one...

SWEET!!