<Some preliminary assessmentsThe Oil DrumWhy This Matters: Katrina and Peak Oil>

8 comments on A Welcome Back Open Thread

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Anonymous on August 29, 2005 - 10:12pm Permalink | Subthread | Comments top
Could someone explain to me why crude oil prices soars if refining capability is reduced? Shouldn't reduced or limited refining capability mean excess crude oil supply, meaning lower crude oil prices?
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Ben on August 30, 2005 - 6:15am Permalink | Subthread | Parent | Comments top
Anonymous, I've wondered the same thing.

In this instance (Katrina) it appears there could be damage to rigs and pipelines, and the LOOP.  If this is the case, then it will reduce the available crude supply since domestic production can be diminished and imports can't be offloaded as easily (or at all, until there's a workaround)

We won't know until everything is checked out, and the oil cos have a vested interest in not shouting about gloom and doom.  After Ivan it was "oh, good, it missed most of the oil fields" but the reality was that it did cause enough damage to affect operations significantly.  But it's hard to know one way or the other the morning after the storm.

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Anonymous on August 30, 2005 - 2:33pm Permalink | Subthread | Parent | Comments top
It'll be interesting to see what happens with the US being physically incapable of importing crude at the rate it requires.  The price of crude in the US will be significantly more valuable that elsewhere in the world yet NYMEX is essentially a global commodities exchange.  I wonder, will the price of NYMEX diverge significantly from Brent?
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