Hurricane forecast raises fears of higher oil prices
Statesman.com: NEW YORK — Meteorologists are predicting a busy hurricane season this year, and any direct hit on the Gulf of Mexico's extensive oil and gas infrastructure could easily send already sky-high oil prices rocketing past $150 a barrel.
But predicting whether, much less where a big storm will strike, is tricky business. Energy markets haven't priced in a potential catastrophe, and won't factor in a hurricane until a storm actually forms.
The 2005 hurricane season was one of the most destructive in history. It sent oil prices soaring into the then-unfathomable $60s.
But oil trades at double that amount today, and a turbulent summer in the Gulf could send prices well beyond the record $135 per barrel it reached last week.
"If we get anything that disrupts Gulf production in a meaningful way ... I think it could easily push prices to the $150 level," said Brad Samples, an analyst at Summit Energy Services Inc. in Louisville, Ky.
The Gulf is home to hundreds of oil and gas drilling platforms and pipelines that are typically shut down when a storm approaches. Hurricanes can damage rigs or scatter pipelines, and that can take months to repair.
Storms also disrupt tanker traffic and the Gulf Coast ports that receive the vast majority of the nation's petroleum imports. The huge refineries that dot the coast grind to a halt when a hurricane approaches land, driving the price of gasoline and other petroleum products upward.
"There's a lot of areas of infrastructure that can be disrupted," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates.
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- What is my prediction? My prediction is near $150 per barrel can be reach without any Hurricane....but of course depending on other factors as well.
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