Moneymanagement’s Weblog

Economic Effects of Hurricane Gustav

Posted in economics by moneymanagement on September 1, 2008

I plan to document the Economic effects of Hurricane Gustav as time comes along. At the end of it I also want to compare it to the devastation caused by Katarina

I would appreciate any input from you as and when stories break out or even personal experiences of family and friends.

The hurricane has hit 16 minutes ago as of right now and the first story that I have read is about how the oil production of USA is going to be affected since the region supplies 26% of the oil required.

Here is an extract

Crude oil for October delivery rose as much as $2.54, or 2.2 percent, to $118 a barrel in electronic trading on the New York Mercantile Exchange. The contract traded at $116.36, in Singapore. Prices, which dropped 7 percent in August, are up 22 percent this year.

Gustav will likely make landfall later today as a Category 3 hurricane, the National Hurricane Center in Miami said. The storm has shut three-quarters of oil output in a region that accounts for 26 percent of U.S. oil production and 14 percent of its natural-gas output.

“This is right on the bull’s eye,” Bloomberg quoted Anthony Nunan, assistant general manager for risk management at Mitsubishi in Tokyo as saying. “Massive power supply cuts are likely and it’s hard to prepare a refinery against any kind of flooding. If there’s a very prolonged outage, a big rally is possible.”

Gulf Coast refineries have cut at least 1.56 million barrels a day of production, about 9.8 percent of the U.S. total. Eight refineries have announced shutdowns, while a further five have reduced capacity.

Please do give your input

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