Hurricane Gustav & Mexico production declines
The first major hurricane of the 2008 season is churning its way toward oil and gas rigs in the Gulf of Mexico — sending prices up even though the dollar is strong today. Gustav turned from a new Tropical Depression yesterday to a Category 1 Hurricane today as it passes over southern Haiti. NOAA forecasters predict it will remain over water south of Cuba and then hit the Gulf as a Category 3 or 4 storm gathering strength from the warm water. This would threaten to shut down Gulf of Mexico fields that equal 25% and 15% of US oil and natural gas production. Only time will tell whether Gustav takes a similar path to Katrina or Rita, hurricanes that increased prices dramatically.
Another major story that emerged today was Mexico’s announcement that its oil production continued its rapid decline. Their main oil field, Cantarell, managed less than a million barrels per day of production in July — less than half its production a few short years ago. At 974,000 barrels per day, Cantarell production has dropped more than a third from last July. New production at key fields such as Chincotepec and Ku Maloob Zaap can only offset part of the decline from Cantarell — threatening our major source of imports to become a net importer themselves within a few years. On top of that, the President of major oil and gas producer Russia said today that they are not afraid of a new Cold War after they recognized the breakaway Georgian territories of Abkhazia and South Ossetia.
With hurricanes, oil production declines, accelerating melting in Greenland’s glaciers, and political gaming — it’s clear that a sustainable energy transition must become a higher priority for the US and all other oil importers.
August 31st, 2008 at 3:20 pm
Pelosi and Reid, who are against oil drilling, wanted to use our strategic oil reserves, as a way of pandering to the public for democratic votes. Now, we have Hurricane Gustov, which is going to put a strain on our oil supply. Our strategic oil supply is supposed to be used for emergencies like this hurricane, or for oil disruption due to terrorism. This just reminds us of how irresponsible politicians like Pelosi and Reid really are!!!
August 31st, 2008 at 3:46 pm
While I agree that a withdrawal from the SPR probably wouldn’t have been a good move without a physical oil shortage (from a hurricane or an embargo) [see my previous blog debating the merits of an SPR release], I wouldn’t label Pelosi and Reid as “against oil drilling.” They are for it in most of the country, just not the most pristine habitats that have been determined to be off limits by countless elected leaders before us (from Clinton to Teddy Roosevelt).
Labels of irresponsibility should not be reserved for politicians on one side of the aisle, Howard. McCain’s message that the US should try to drill our way out of current oil price hikes is misleading to the public. US oil production has been in decline since 1971 (37 years!) even though our rig count has often increased and exploration and production technologies have advanced significantly. The solution to oil price woes lies mostly in the ramping up of efficiency and substitutes (like plug-in hybrid electric vehicles that get their power from the sun and the wind). Even if we open up more areas to drilling in the years ahead, we will be hard-pressed to maintain current crude production levels over 5 million barrels per day, let alone expand production to make up for the declining oil fields of Mexico, Norway, the UK, Indonesia and elsewhere.
Here’s to a sustainable energy revolution-