The Peak Oil Crisis:The Storms of August

The Storms of August
By Tom Whipple

It has become fashionable in peak oil circles to make the comparison between the current summer and that of 1914--- just before the cataclysm of World War I. That year too, was a warm and idyllic summer in which the people went happily about their business unaware the assassination of an archduke was about to destroy the old order and plunge the world into decades of turmoil.

This time, the trouble spawned in the South Atlantic , strengthened in a global-warmed Caribbean and slammed into the heart of the US oil industry. The flooding of New Orleans and the destruction of miles of the Gulf coast will rank among the greatest natural disasters America has ever known, for a number of reasons.

For the Gulf oil industry, the approach of a Category 5 Hurricane was a signal to shutdown and run for cover. The super tankers bringing up to 900,000 barrels a day to the Louisiana Offshore Oil Port (The LOOP) headed elsewhere. The 55,000 oil workers on platforms out in the Gulf shut off the pumps, plugged their wells, and boarded ships and helicopters to safety, thus halting the production of some 1.4 million barrels of oil a day � some seven percent of US daily consumption.

Eight refineries in the path of the storm were shut down and the workers evacuated. This reduced immediately US refining by 1.8 million barrels a day.

As the storm moved towards shore, first the offshore oil platforms in its path were badly mauled. Some 30 rigs were sunk including hubs that concentrate and prepare the oil for transport to shore. We do not yet have a complete assessment of the damage to the undersea network of pipelines that brings the oil to shore, but if the damage done by much weaker Hurricane Ivan last year is any guide it should be considerable. In the opinion of one knowledgeable commentator, it will take years to bring production back to pre-hurricane levels.

Finally, the storm cut the electricity to the pipelines moving some 3 million barrels per day of gasoline, jet fuel, and heating oil from the Gulf refineries to consumers in the mid-west and the East Coast.

The week before the hurricane, the US gasoline inventory was down to 194 million barrels or about a 19-day supply. The loss of production from 10 refineries and the shutting down of the pipelines soon led to spot shortages running from the Rockies through the mid-west to the Southeast. The West Coast and north of New York are not part of the Gulf oil infrastructure.

[ read entire article ]