The folks over at The Oil Drum are following Katrina and the storm’s likely impact on the U.S. in terms of energy and economy. Check out their post Gulf Oil Supply/Katrina Weather Map Update: The Event that Introduces Peak Oil to a Nation:
This thing WILL be a big deal, not just because New Orleans is a prime target (remember water has to be pumped out of NO because it is under sea level, and right now with Katrina as a category 5, the estimates are 30 feet of water) under the current models for Katrina, but she could also disrupt Gulf supplies of petroleum (the GOM supplies around 1.3mbpd, we use around 20mbpd in the US) from rigs, etc., for a while. Many refineries are also located within this area (see LA refinery link below), as well as pipeline stations and tanker stops.
With supply and demand balanced on a knife’s edge as it is, this could lead to huge amounts of volatilty in the oil markets for weeks to come.
Even with all of the human tragedy that come from this, the whole scenario to follow will illustrate the peak oil problem. There is simply no more extra oil (except maybe the SPR?) we can call upon to put into the system…and with supply and demand balanced as it is (and with demand only growing over time), it only takes one “something” (terror, weather, malevolent world politician) to disrupt the system. This is what Goldman Sachs was saying six months ago when they introduced the idea of a $105/bbl superspike. One event that really disrupts supply means a terribly volatile market…and yes, that $105/bbl number probably equals somewhere around $4/gal or more for gas or even worse, a shortage of supply because of systemic problems.