September 12, 2008

Ike, Oil Refineries, and the 2008 Campaign

Obviously Ike is going to be a terrible storm. It looks like people are sure to die tonight, and the damage to Galveston could be devastating. Something else for us to keep an eye on though is how this will affect oil prices. Most of Texas's big refineries are in areas that will be hit hard by this hurricane - places like Baytown, Texas City, Beaumont, Port Arthur and within Harris County itself. And for that matter, two of Louisiana's larger refineries are close too (in Lake Charles and Westlake). I don't know enough about these facilities to hazard a guess about whether or not they'll be damaged by the storm. But if they are that'll likely mean higher prices at the pump, and it may aid the"drill, baby, drill" political agenda". Again, this isn't meant to equate those effects with the deaths that are likely going to happen tonight, or what this is going to do to people's lives and livelihoods in Texas. But Ike could have an effect on the course of national politics as well.

Posted by armand at September 12, 2008 12:58 PM | TrackBack | Posted to Natural Disasters


Comments

Some people are so very dumb. I'm once again spending a lot of the day following Ike, and I'm reading Eric Berger's chat, and people are asking if they should bring their pets in. How dumb are these people? They really think Fluffy is going to enjoy pouring rain and 90 mph winds?

Posted by: Armand at September 12, 2008 03:51 PM | PERMALINK

What I'm hearing suggests that supply disruptions -- and resultant price spikes -- from Ike are unlikely to last more than two weeks or so (if that) unless the storm gets a lot bigger.

Posted by: jacflash at September 12, 2008 04:54 PM | PERMALINK

And I note that October gasoline futures (RBV08.NYM on Y! Finance) were up less than $0.02 today (to $2.7646/gal). They jumped a bit yesterday but it looks like the market feels that Ike is priced in at that level.

Posted by: jacflash at September 12, 2008 04:59 PM | PERMALINK

...and after reading Berger and Loy and a few other folks myself I now wonder if the market really grokked the whole surge thing here. And that a big chunk of the Strategic Petroleum Reserve is right in the storm's path. *starts to worry*

Posted by: jacflash at September 12, 2008 06:14 PM | PERMALINK

The strategic petroleum reserve won't be affected by the hurricane; it should be underground and protected. That being said, I don't know the actual circumstances. I could be wrong.

Pumping it out might be somewhat problematic, but that shouldn't be necessary. Oil is down considerably since peaking close to $150, and Bush would have to be crazy to release SPG oil when their really isn't a need for it.

Of course, betting on Bush to act rationally isn't a safe bet, either.

Posted by: baltar at September 12, 2008 11:07 PM | PERMALINK

So the early reports are that the storm wasn't as bad as feared, though large chunks of Galveston are under water. But that must be a ton of glass on the streets of Houston. Supposedly all the windows on one side of the JP Morgan Chase building (formerly Texas Commerce) are gone - and that's the tallest building in Texas, over 1000 feet high.

Posted by: Armand at September 13, 2008 10:57 AM | PERMALINK
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