More hurricane stuff
I was talking with a friend earlier and we were of course talking about the gas prices, and all the other disruptions in the wake of Katrina. So it got me wondering, I have a passing knowledge of why gas prices are so high, but I wanted something more concrete. This is what I found.
Typically oil companies keep a reserve of 7-10 days for incidences just like this. We are not going to face any long term gas shortages, in fact because demand will exceed supply (economics is fun) the prices will skyrocket. Most predictors indicate it will level off at 4-5$ a gallon. Not a terribly unreasonable estimate either. Especially considering the gulf coast region is a major supplier of crude to the United States. The areas hit hardest produce one third of all crude, one third of all natural gas, and ten percent of our refineries. So why don't we just dip into the national reserve for our gasoline needs? A fair question, we have and are. But it is crude oil. It hasn't be refined yet. With 10% of our refining capacity gone or damaged it will take time. More time that what it world have been before which isn't exactly a day or two. It takes several months in order to refine the vast amount oil we use into the vast amount of gasoline we use. Our best bet right now is to try and buy more oil from the mideast, which they have a cap on how much we can buy artificially keeping supply low (a practice that's illegal here in America, imagine if farmers withheld grain and let the masses starve just so they could charge 70$ a loaf). Hugo Chaves, the man who Pat Robertson wants dead has promised oil, and food. Venezuela is a major supplier of the worlds oil. I think they are the third most producing nation.
Things will be tight for a long time to come. In fact I would expect to never see 2$ gas again. There is still a possibility of running out of gas but I wouldn't worry much. As for the planes being grounded, that can hurt our economy in a very severe way, but business men will still fly, or drive to do business. They will find away to do business. So that won't hurt as much, but it will still leave a bruise.
Typically oil companies keep a reserve of 7-10 days for incidences just like this. We are not going to face any long term gas shortages, in fact because demand will exceed supply (economics is fun) the prices will skyrocket. Most predictors indicate it will level off at 4-5$ a gallon. Not a terribly unreasonable estimate either. Especially considering the gulf coast region is a major supplier of crude to the United States. The areas hit hardest produce one third of all crude, one third of all natural gas, and ten percent of our refineries. So why don't we just dip into the national reserve for our gasoline needs? A fair question, we have and are. But it is crude oil. It hasn't be refined yet. With 10% of our refining capacity gone or damaged it will take time. More time that what it world have been before which isn't exactly a day or two. It takes several months in order to refine the vast amount oil we use into the vast amount of gasoline we use. Our best bet right now is to try and buy more oil from the mideast, which they have a cap on how much we can buy artificially keeping supply low (a practice that's illegal here in America, imagine if farmers withheld grain and let the masses starve just so they could charge 70$ a loaf). Hugo Chaves, the man who Pat Robertson wants dead has promised oil, and food. Venezuela is a major supplier of the worlds oil. I think they are the third most producing nation.
Things will be tight for a long time to come. In fact I would expect to never see 2$ gas again. There is still a possibility of running out of gas but I wouldn't worry much. As for the planes being grounded, that can hurt our economy in a very severe way, but business men will still fly, or drive to do business. They will find away to do business. So that won't hurt as much, but it will still leave a bruise.