I'm sort of at a loss for words, so first, I'll point out that The Oil Drum is doing a great job of discussing Rita.
Secondly, I think we all have to ponder the reality that global warming may well be involved here, and the further implications of that [and there are several..]. One theory on global warming is that the world's weather events will become more intense; I'm sure as time goes on we'll hear more about this from the mainstream media. Or at least we should..
Finally, I'm sure everybody is aware of how potentially dangerous this storm is at this moment. Under the absolute worst case scenario, we could simulate both peak oil and peak natural gas in the US over the next few months.
CNNMoney: Rita could equal $5 gas.
Katrina damage was focused on offshore oil platforms and ports. Now the greater risk is to oil-refinery capacity, especially if Rita slams into Houston, Galveston and Port Arthur, Texas.
"We could be looking at gasoline lines and $4 gas, maybe even $5 gas, if this thing does the worst it could do," said energy analyst Peter Beutel of Cameron Hanover. "This storm is in the wrong place. And it's absolutely at the wrong time," said Beutel.
The Dallas Morning News: Refineries slow down preparing for Rita.
"It's almost like, what Katrina didn't get, this one's going to," said long-time Dallas oil investor and head of BP Capital, T. Boone Pickens, in a speech Wednesday. Pickens said he expects oil, natural gas and gasoline prices to settle once the storm passes, but to remain high because supply is tight.
CNBC: Stocks Slump on Rita Fears; Dow off 103.
Given than four oil refineries are already down, Rita "really is a national disaster," Valero Energy (VLO, news, msgs) CEO Bill Greehey told Reuters. "If it hits the refineries, and we're short refining capacity, you're going to see gasoline prices well over $3 a gallon at the pump," Greehey told Reuters.
Even if Rita ends up causing less damage than some fear, the U.S. will go into winter with a lot less natural gas in storage than last year, and a colder-than-normal winter could really send prices spiking, Robert Morris, analyst at Banc of America Securities told CNBC's "Squawk Box."
Bloomberg: Oil, Gasoline Rise for 2nd Day as Hurricane Heads to Refineries.
``The Houston area is ground zero of the refining industry,'' said Rick Mueller, an analyst with Energy Security Analysis Inc. in Tilburg, the Netherlands. ``If it suffers the scope of damage caused to refineries in Louisiana by Katrina, we could see rationing and queues at the gas pump.''
``Rita is developing into our worst-case scenario,'' said John Kilduff, vice president of risk management at Fimat USA in New York. ``This is headed right into our other major refining center just after all the damage done to facilities in Louisiana. From an energy perspective it doesn't get any worse.''
``Hurricane paths are like spinning the bottle, you don't know where they're going to hit until about three hours from landfall,'' said Matthew Simmons, chief executive of Simmons & Co., a private investment bank in Houston for the oil and gas industry. ``Anything south of Corpus Christi and we're fine. It could be Pearl Harbor.''
Bloomberg: Oil, Gasoline Jump; Rita Disrupts U.S. Output, Imports in Gulf.
``This basically represents a heart attack to U.S. energy infrastructure and production,'' said John Kilduff, vice president of risk management at Fimat USA in New York. ``This country has two main refining centers, two energy alleys. One was hit last month with Katrina. The other one is going to get hit.''
``The potential consequences don't even bear thinking about,'' said Paul Horsnell, head of energy research at Barclays Capital in London. ``There's such a concentration of refineries and chemical plants in a relatively small area that anything of that kind of intensity would be extremely nasty.''
WSJ: With Refineries in Rita's Path, Sector Braces for Second Punch.
The energy industry has never seen anything like the 2005 hurricane season. The potential for two major storms of this strength hitting the offshore industry in one year "is unprecedented in modern memory," said Troy Frame, chief meteorologist for Alert Weather Services Inc., a Lafayette, La., company that provides offshore weather forecasts to the oil-and-gas industry.
As the energy industry rushed to evacuate 40,000 workers from offshore facilities and to begin the painstaking process of shutting down refineries, energy markets grew worried about the supply of gasoline for the next few days and the availability of natural gas for the winter, when the fuel is used to heat homes across the country. About one-quarter of the oil and natural gas produced in the U.S. comes from the Gulf of Mexico, and the coastal communities from Corpus Christi, Texas, to Pascagoula, Miss., host fully one-third of U.S. refining capacity. "The supreme concerns are refining capacity and natural-gas supply," said Raymond Carbone, president of Paramount Options Inc., an energy brokerage in New York City.
The storms have drawn the attention of lawmakers, prompting new discussions of additional energy legislation to expedite permits for new refineries and to open new offshore areas for exploration. At the same time, there is the stirring of political will to find ways to encourage more automobile fuel efficiency, said Robin West, chairman of consulting firm PFC Energy. "The hurricanes are causing the political winds to change in Washington," he said. "And the only way change comes about is pain, and, frankly, the American consumer is starting to feel pain in energy in ways they haven't felt in 20 years."
The potential for a double whammy to the Gulf Coast energy industry has underscored the risk of putting much of the nation's energy infrastructure in a natural-disaster corridor. The refining industry already is so vulnerable in the aftermath of Katrina, "You don't need a worst-case scenario to get a worst-case outcome" with Rita, said Larry Goldstein, president of the Petroleum Industry Research Foundation.
OPEC's decision "is not going to help put gasoline in our car," said Kim Pacanovsky, oil and natural-gas analyst for KeyBanc Capital Markets, a division of Cleveland-based KeyCorp. "This is a huge wake-up call for the American people and the government to add refineries and look at conservation."
Let's hope/pray for the best.