Will Hurricanes Push Gas to C$1.75 a Liter?

Canadian motorists should brace for gasoline prices of $C1.75 per liter, as Tropical Storm Gustav threatens to shut down oil production in the Gulf of Mexico. With weather agencies calling for another active hurricane season, a new report from CIBC World Markets is warning that pump prices could spike if the 2005 storm season that saw Hurricanes Kartrina and Rita is repeated. Gustav is expected to reach the Gulf of Mexico by Sunday.

Jeff Rubin, CIBC's chief economist:

Only three years after hurricanes Katrina and Rita devastated Gulf of Mexico oil and gas production, an emerging hurricane storm is tracking another potentially lethal swath through America’s energy heartland. And with both oil and gasoline inventories much lower than when Katrina and Rita hit, the price consequences could be even worse this time.

The report said oil production in the rig-dotted Gulf, which some consider America’s best hope for greater energy self-sufficiency, will be increasingly threatened by major Gulf storms that are growing in both frequency and strength. It also said gasoline to climb to $5 per gallon in the U.S.

Mr. Rubin acknowledged that supply disruptions and price hikes would be temporary, but said hurricane damage could produce a lasting impact on supply growth.

He said:

Protracted multi-year delays to marquee projects like BP’s Thunder Horse have meant that new production has grown at a fraction of earlier projections for the region and has lagged well behind rapid double-digit depletion rates that are characteristic of offshore fields.

Comments

[WEBISKING:]

Those who went long XOM usng options as i dis will do real well NO matter what thhurricane actually does. The production will be shut down and there will be anice spike for the short term.This was really a no brainer

2008 Aug 31 12:04 PM

[unimpressed...:]

As with Katrina, any oil shortages resulting from the shutdown of oil producers will be very short term. Any increase in oil prices will be the result of panic and manipulation by speculators. Don't buy into their self-serving rhetoric and manipulative speculating. Use the power of yours purse to curb their abuse of a short-term condition. Drive less and buy less and burn their greedy fat fingers!

2008 Sep 01 09:18 AM

[CLH:]

Im not interested in the short term. Oil is still going down. Demand is down and there is no shortage of oil.

2008 Sep 01 11:02 AM

[jjason:]

OIL SPECULATION FOR DUMMIES

www.stopoilspeculation.../

A public service from me to you.

Oil is political.

OBAMA / BIDEN 08

2008 Sep 02 07:48 AM