Ike, gas price and impact on GDP

Ike, gas price and impact on GDP

The US Department of the Interior's Minerals Management Service said that as of Wednesday, about 95.9 per cent of oil production and about 73.1 per cent of natural gas production in the Gulf remained shuttered as Hurricane Ike approaches Texas. Oil and gas operators have had the bulk of their production shut down since they began preparing for Hurricane Gustav nearly two weeks ago.

Gas prices jumped 17 cents a liter here over night. I suspect another 40 cents price hike in the next 48hrs. Many reports cited the situation that cities across southern states are seeing a shortfall of gas supplies. I'm shocked how quickly those tanks can be sucked dry.

I've got a very bad feeling we have no idea how long this situation could last. Someone said that if it hoarding and panic price buying get out of hand it can mean substantial and rapid hits to the supply. I think we are going to get to see just how that plays out within the next few days.

The thing is, most of these shortages are NOT related to Ike, they are the result of Gustav, the "non-event". It's just taken a couple of weeks for it to move down the pipe, so to speak.

Ike takes the problem to a whole other level, now the shortages won't be temporary for a week or two, they about have to last at LEAST a month here, just to get any refineries operating and pushing gas through the pipelines.

People on the west coast and in the northwest currently don't see shortages, they have their own refining capacity. However, to make up for the shortfall elsewhere, to handle the disaster needs of Ike, gas from these refineries will need to be TRUCKED to states east, obviously inefficient but also obviously necessary. This will suck down the supply in those areas, and then they will hit shortage in a couple of weeks more at most.

The question in my mind right now is just what happens to say Charlotte, NC if they go a week with empty gas pumps? People can't go to work, kids can't go to school, the economy basically grinds to a halt in that city in one week. Multiply that one out by ALL the cities currently facing gas shortages, how does that play out for the GDP? This is not an isolated incident of some NC, TX, LA or FL cities out of gas, its spreading like wildfire throughout the system, and RAPIDLY.

Coupling with financial crisis hovering on Wall Street, the next week will be something to watch in the history of Human Kind and of the Nation-State we called the USA.

It's not going to be pretty at all...