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Tuesday, September 02, 2008

Gustav Oil Fears Decline

Hurricane Gustav slammed into the Louisiana coastline yesterday amid fears that the powerful hurricane could put a virtual halt to oil production in the northern Gulf of Mexico for the foreseeable future. Fortunately, Gustav was much weaker than forecasters originally thought and oil production was virtually unharmed in its wake. After Tuesdays trading day wrapped, the price on a barrel of oil dropped $5.75 to $109.71 per barrel, continuing a drop of nearly $40 since the July high. Gasoline prices still remain high at $3684 per gallon on average, and have been declining slowly the last two months.
Although the refineries and oil platforms pulled there workers in lieu of Gustav, as early as this morning, the oil companies and rig and pipeline owners were returning their people to their stations. 
“Preliminarily, we don’t know of any major damage at this time,” John Rodi, deputy regional director of the U.S. Minerals Management Service, said Tuesday.
John Rodi, who oversees offshore activity in regards to oil production, said that it was too early to say when production would resume even though some companies are gearing back up Tuesday. There are however two more storms churning offshore and another crossing the Atlantic as we speak. It is unclear what effect Hannah and Ike will have on the industry as they are too far out to speculate at this time. 
Source: MSNBC News