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August 31, 2005

Comments

Grant Henninger

Sorry about the three trackbacks, every time I edited the post it sent another ping. MT isn't great with that sometimes. But I think you are being sensationalist. Things really aren't as bad as you are trying to make them out to be. Two months from now gas prices will be back to normal, and industry will continue along. The streangth of our system is how flexable it is and how well it reacts to change. The markets will adjust over time, what might seem like a crisis now will be a forgotten memory by years end (economicly speaking at least).

Robert Cassidy

What is truly infuriating to me is the head of FEMA on CNN tonight gloating about how he wanted to create a serious disaster plan. So he gets money from Bush to work up a plan. A few years ago he designs a plan and guess what - it's an F5 hitting New Orleans. They work up the recovery plan. Last year he says they rehearse the recovery plan. How wonderfully prescient!

So why the hell is this going so poorly! There's a plan explicitly for this! It's been practiced recently! Get on the phone and tell everyone to implement the plan! NOW! Surely the plan addresses evacuating 100,000 people clinging to rooftops in 95 degree heat before they dehydrate since they're surrounded by seawater. This was a known outcome. Why no federal air support until tuesday? Why are there so few natl guard there? The great thing about hurricanes is that you know they are coming for days, you can organize in advance. We knew this would be an F4 on Friday and we were awfully sure it would hit New Orleans or close to it.

I swear it seems like these guys are figuring this out on the fly.

Jeremiah

Party time's over.

Ah'm not a nigga tryin ta throw some confetti
Ah'm jes a nigga tryin ta head for the hills wit muh bitch, muh gat and muh'chete

Jeremiah

Another thing... you would have thought he would have, like, cut short his jamboree and come back to washington.

Don McArthur

From my local paper (the Raleigh News & Observer) this morning:

"...The sudden pinch on the nation's gasoline supply was caused by high demand and the shutdown of oil refineries throughout the Gulf of Mexico because of damage from Hurricane Katrina.

"The pipeline from the Gulf Coast clear up to Baltimore is shut down," said Steve Sheetz, chairman of Sheetz convenience stores, an Altoona, Pa., company with three area locations.

The pipeline is intact, but there is no electricity to run it.

Some of the refineries might be back online within a week or two, but it's not known when the pipeline will be back to full capacity. About 90 percent of the Southeast's gasoline comes through that pipeline..."

My thought: ...such a single-point-of-failure in our infrastructure system indicates that the Department of Homeland Security has been doing nothing for four years.

Even the usual rah-rah team for the Bush Administration is beginning to show the strain. Last night I saw FOX New's Shepard Smith angrily voicing his frustration that he had seen no food or water being delivered to New Orleans in two days of on scene coverage. Back at the studio, Britt Hume hastily changed the subject to the "latest outrageous comments by Cindy Sheehan"...

Observer

"Two months from now gas prices will be back to normal"

Define "normal".

tdl

The runs on gas stations are just the initial reaction of the "crowd". Prices will most likely moderate, but I would guess that the will settle at a higher price point than we had last week. I do not think it will be above $3 (except in locales that create ineffeciencies through taxes and additives.) The only real threat at the moment is that states will go after "price gougers" and "profiteers". Any interference with the pricing mechanism and we will see the shortages and sharp price spikes that Mr. Robb describes. Price caps (like those recently imposed in Hawaii) will create a 1970's type problem.

Regards,
tdl

John Robb

Well, there was a shortage of refining capability before the current crisis. Stores of gasoline were down to less than 20 days of supply. Now, with 10 refineries out of action in combination with hoarding, there may be significant prices increases as those stores run down. There will also be a significant number of spot shortages (where gasoline runs out) due to inoperative product pipelines (pipelines carry a huge amount of gasoline to market).

A release of only 1 million barrels of oil from SPR doesn't mean much in a gasoline shortage due a lack of refineries to process it. It also is less than one day's lost oil production (we have lost 1.4 m barrels a day of production from the Gulf -- virtually all of the "slack" in the "global" oil market).

Things are going to be tough (while not even mentioning all the other markets that are going to be impacted by the loss of ports).

The cure all to an energy crisis has always been a recession -- which tamps down demand. That will be painful in the US, but it may be catestrophic in China where fast growth has become a central part of the "social contract."

tdl

Those are definetly good points. Add to the mix now, the Fed. Stock prices were higher this morning and Fed funds futures have been pricing in that the Fed. will stop raising rates. I do not think that will be the case, however. I think Greenspan is as inept as the rest of the central planners in D.C. Anyway, any increased credit expansion will just drive inflation higher. There are sure signs of recession and I am inclined to agree with you. The question now becomes, will it be 70's style (with the threat of price caps and punishing "price gougers") or will it be more like the beginning of this decade.

Just imagine the poor saps graduating from MBA programs this year and looking for I-Bank positions! What fools! Oh, wait, that's me!!!

Regards,
tdl

Chet Richards

What was interesting was how fast it happened. Around 3:30, local radio stations began carrying stories of $5/gal gas. By 5, some stations started running out of gas. Once that was announced, there was sheer panic. Peachtree ST in Brookhaven (close-in suburb) was blocked for a time by traffic trying to get into service stations. One station closed early when attendants became afraid of the violence they were seeing. As late as 1 pm today, some stations in Athens, 60 miles to the east, were still out of gas.

Osama's revenge, perhaps? Part of his strategy has been to put the US economy under stress. Then wait for "unplanned contingencies" to happen. Result will be not so much economic collapse, but damage to the moral strength of the nation, where 4GW struggles are ultimtately won or lost. Just look at the pictures out of New Orleans.

I'm afraid that I agree with John.

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