Alabama, Florida, Mississippi and Louisiana have all declared states of emergency. About 10.5 percent of the oil rigs in the Gulf of Mexico have been evacuated, which is expected to reduce oil production by about 24 percent per day and natural gas production by 8 percent daily.
An article on Forbes is predicting Isaac could give Hurricane Katrina, the most expensive hurricane in history, a run for its money in terms of destruction and economic impact, especially when it comes to the energy industry:
When it comes to offshore oil and gas rig infrastructure in 2012 versus 2005, the biggest difference is that the rigs placed into the Gulf of Mexico in the last several years have been hardened to resist Category 4 or 5 hurricanes. However, up until now, other than Hurricane’s Gustav and Ike in 2008, there has been no real test of the endurance of newer ‘hurricane resistant’ infrastructure that has replaced much of the aging platforms in 2005. Isaac may very well be the storm to test the fortitude of the newer offshore hardware.
Natural gas and oil prices are expected to increase accordingly:
The hurricane damage inflicted by Katrina caused oil prices to increase from the mid-$60s per barrel to over $70/bbl and gasoline prices at the pump rocketed to near $5 a gallon in some areas of the US. The US government released oil from its stockpile in the Strategic Petroleum Reserves (SPR) to offset price rises. In the natural gas market, prices were trading in the $9 to $10/MMBtu range at the time, but spiked to over $15/MMBtu as the full extent of the damage became apparent . . . . In terms of energy prices, it’s very likely that the oil and gas markets will react bullishly to Isaac when traders come back to work on Monday
taggedCurrent Affairs | Energy