Oil prices to spike as production halts for super-storm Katrina
Energy production in much of the US Gulf of Mexico, which accounts for more than 30% of all US crude oil production shut down on Monday in anticipation of Hurricane Katrina, causing crude oil prices to surge to nearly $70 a barrel.
Energy companies operating in the area were forced to evacuate workers indefinitely last week in anticipation of the coming super-storm. The world's largest oil company, Exxon Mobil Corp., evacuated all its 430 employees from the area and stopped 50,000 barrels of daily oil production and 300 million cubic feet of gas, company spokeswomen reported.
At the New York Mercantile Exchange on Sunday, crude oil futures spiked $4.50 per barrel, bringing the cost to above $70 for the first time in 22 years, when oil began trading there, according to the <i>AP</i>.
Future prices depend on when refineries are able to resume operations and what level of damage in caused to production rigs and pipelines.
US natural gas inventories are lower than usual heading into the highest demand time of year, especially since refineries spent more time this summer taking advantage of high pump prices and making gasoline, instead of building stockpiles of heating oil for the winter months.
Katrina could be the third largest storm to hit the US since weather records have been kept, threatening to devastate the coastal town. Lying eight feet below sea level, the expected 20-foot sea swells have cause nearly 80% of the city's population of 480,000 to evacuate.
Additional fears exists that flooding in the wake of the storm could turn New Orleans into a toxic lake filled with chemicals and petroleum.
The storm is expected to hit at approximately 8 am US Eastern Central time.