Canadian Bodybuilding
30-08-2008, 02:11 AM
TORONTO - Canadian motorists should brace for gasoline prices of $1.75 per litre as tropical storm Gustav threatens to shut down oil production in the Gulf of Mexico, according to a report released Friday.
With weather agencies calling for another active hurricane season, CIBC World Markets is warning that pump prices could spike if the 2005 storm season that saw hurricanes Katrina and Rita is repeated.
Gustav is expected to reach the Gulf of Mexico by Sunday.
"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," said Jeff Rubin, CIBC's chief economist. "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 US per gallon in the U.S.
Rubin acknowledged that supply disruptions and price hikes would be temporary, but said hurricane damage could produce a lasting impact on supply growth.
"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," he said.
"This has been the only area in the U.S. in which production is growing and needed to grow to offset the ongoing declines from the lower 48 states and Alaska," Rubin said in an interview.
"Yet here we are three years after Katrina, and Gulf production is 300,000 barrels less than it was before 2005."
"So I think that quite apart from how high gasoline prices spike next week, this is really a lethal blow to America's attempts for self sufficiency.
"That's the bigger story and the more lasting story."
With weather agencies calling for another active hurricane season, CIBC World Markets is warning that pump prices could spike if the 2005 storm season that saw hurricanes Katrina and Rita is repeated.
Gustav is expected to reach the Gulf of Mexico by Sunday.
"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," said Jeff Rubin, CIBC's chief economist. "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 US per gallon in the U.S.
Rubin acknowledged that supply disruptions and price hikes would be temporary, but said hurricane damage could produce a lasting impact on supply growth.
"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," he said.
"This has been the only area in the U.S. in which production is growing and needed to grow to offset the ongoing declines from the lower 48 states and Alaska," Rubin said in an interview.
"Yet here we are three years after Katrina, and Gulf production is 300,000 barrels less than it was before 2005."
"So I think that quite apart from how high gasoline prices spike next week, this is really a lethal blow to America's attempts for self sufficiency.
"That's the bigger story and the more lasting story."