Sunday, August 28, 2005
Yeah, I'm marooned in the apartment again because it was another triple-digit day. But it could be worse...way worse.
Hurricane Katrina is shaping up to be the Big One, as far as natural disasters go. The last Category 5 storm to hit the US was Hurricane Andrew. It hit in 1992 and was only matched in financial impact on the United States by the Northridge Earthquake.
Katrina could be way worse, and here's why.
The coast of Louisiana is dotted with refineries. There's oil platforms off the coast, a LNG station, and not just one, but TWO of the Strategic Oil Reserve storage facilities.
Here's the BIG picture.
And here's another picture which not only shows two of the Strategic Oil Reserve storage facilities, but also its two neighbors which will be getting an indirect hit from Katrina.
They are expecting crude oil prices to go up $1 per barrel tomorrow, and that's a very conservative estimate. I suspect that if the worst case scenario happens, a $1/gallon surge for gasoline wouldn't be out of the question. We've been bracing for $3/gallon here in the Los Angeles area, but $4/gallon or maybe even $5/gallon would be suddenly in the picture.
And of course, there's a Dubya SNAFU to factor into the picture. The current budget cut $71.2 Million from the Army Corps of Engineers for the New Orleans district. Do you realize how huge that is?
A quote from the linked article:
There is an economic ripple effect, too. The cuts mean major hurricane and flood protection projects will not be awarded to local engineering firms. Also, a study to determine ways to protect the region from a Category 5 hurricane has been shelved for now.
And it's not like this was unexpected...New Orleans has been there before. Submitted for your approval: Hurricane Camille, 1969.
Suddenly, a heat wave in Los Angeles doesn't seem so bad. "Too much bloody perspective," as Nigel Tufnel would say.
posted 6:05 PM