Administration officials and others have said Rita did minimal damage to the oil industry --- the reality is very different.

http://news.ft.com/cms/s/034a384e-2f8a-11da-8b51-00000e2511c8.html

Rita causes record damage to oil rigs  

By Carola Hoyos in London, Sheila McNulty in Houston and Thomas Catan in Johannesburg
Published: September 27 2005 20:14 | Last updated: September 27 2005 20:14

Hurricane Rita has caused more damage to oil rigs than any other storm in history and will force companies to delay drilling for oil in the US and as far away as the Middle East, initial damage assessments show.

ODS-Petrodata, which provides market intelligence to the offshore oil and natural gas industry, said it expected a shortage of rigs in the US Gulf this year.

“Based on what we have right now, it appears that drilling contractors and rig owners took a big hit from Rita,” said Tom Marsh of ODS-Petrodata. “The path Katrina took was through the mature areas of the US Gulf where there are mainly oil [production] platforms. Rita came to the west where there is a lot of [exploratory] rig activity.”

Ken Sill of Credit Suisse First Boston said: “Early reports indicate numerous rigs are missing, destroyed or have suffered serious damage and several companies have yet to report. Rita may set an all-time record.”

The US Coast Guard said nine semisubmersible rigs had broken free from their moorings and were adrift.

This damage could not have come at a worse time for oil companies and consumers. US crude futures on Monday fell 37 cents to $65.45 a barrel in midday trading in New York as refineries that were evacuated before the onset of Rita returned to operation.

Earlier in the day, Ali Naimi, Saudi Arabia's oil minister, said the market had not taken up the 2m barrels a day of spare capacity the Organisation of the Petroleum Exporting Countries offered last week. Speaking in Johannesburg, he blamed high oil prices on a lack of industry infrastructure, including rigs and refineries, rather than oil reserves. Rigs, which are movable and are used for exploration and development, were in short supply before hurricanes Katrina and Rita blew through the US Gulf in late August and September.

High oil prices and the desperate search for new oil supplies needed to meet rampant demand from the US and China have made rigs difficult to find and expensive to hire. Rigs cost $90m-$550m to construct, depending on how sophisticated the structure and how deep the water in which it will drill. A rig ordered today is unlikely to be ready before 2008 or 2009, analysts said.

As a sign of just how precious rigs are becoming to the market, Anadarko, the biggest US independent oil company, this week set a record by committing to a rig six years in advance; commitments in the past were made months ahead of time rather than years.

Initial reports from companies are ominous. Global Santa Fe reported it could not find two of its rigs. Rowan Companies reported four rigs damaged, with two having moved, one losing its “legs” and the fourth presumed sunk. Noble has four rigs adrift, with two run aground one into a ChevronTexaco platform.

"Its a conspiracy".

With oil at $65 a barrel, they can afford to gold plate the new rigs that will replace the old broken down ones.

this sounds really, really bad.

Quoted: "Its a conspiracy".

It is not a conspiracy, but I believe that to minimize impact on the stock market, officials will come out and sugarcoat the truth.

Whether any of this is true or not, time will tell, but my first impression is:

"The line for Federal Recovery Fund starts here". Better start prepping everyone for bloated costs and get in line before LA and NO takes all the money.

What you are saying is true. My Wife and her Family are from Lake Charles. Her Family still lives there(or did after this storm). They are still in AR. do to evac before the storm. They have been in contact with friends back in Lake Charles that work in the Petro-Chem industry that stayed or returned. First hand accounts are not what we are hearing from the news that is for sure. The industry was heavily damaged in the Westlake/Lake Charles and Sulphur area not to mention Port Aurthor and Beuamont. Cameron/Holly Beach area was completely destroyed. A large amount of boats and support operations for the industry were in Cameron. There was also massive damage to off-shore rigs from what they say.

There was a reason/motive behind the Presidents speech yesterday about trying to conserve fuel. IT was not just to make us fell all warm and fuzzy inside. I feel they are trying to minimize this story do to National Security issues. I sure hope I am wrong but, it seems we are not getting the whole story. We will all find out for sure soon enough.

Quoted: What you are saying is true. My Wife and her Family are from Lake Charles. Her Family still lives there. Th

Button problems this morning?

Why wouldn't the looney lefties in the media want to hype up the damage?

They hate America and Bush and Oil and SUVs right?

tagged

BOHICA

Quoted: With oil at $65 a barrel, they can afford to gold plate the new rigs that will replace the old broken down ones.

Amen!

The Financial TImes is a VERY reputable source, Red Goat.

http://news.ft.com/cms/s/91981572-3047-11da-ba9f-00000e2511c8.html

President George W. Bush's call for the US public to conserve energy is aimed at preventing a run on petrol at a time when the US is precariously short of it.

Energy companies have been trucking fuel in from various parts of the US to restock pumps that ran dry in Texas, following two hurricanes that struck the heart of the nation's energy infrastructure and a massive evacuation that cut into much-needed supplies. This has stretched already tight national petrol supplies.

“The president's best bet for the next two weeks is to try to see if he can get Americans to stop doing discretionary driving without creating panic,” said Amy Myers Jaffe, research fellow at the James A Baker III Institute for Public Policy. “He's in a very challenging position.”

The US petrol market lost close to 80m gallons of petrol in the evacuation of about 3m people from Houston ahead of Hurricane Rita. Although Houston was not hit, forecasters had projected that the fourth-biggest US city would be in the eye of what was then a Category 5 hurricane. That boosted regional demand 4-5 times higher than normal as residents fled, Baker Institute research shows.

In the end, Hurricane Rita released its fury on the Gulf of Mexico drilling area, damaging more offshore rigs than any storm ever, before hitting four refineries on the Texas/Louisiana border.

While damage to rigs, which drill for oil, will drive up future fuel prices, the damage to refineries on top of the run on petrol in the evacuation is likely to have an immediate impact at a time when Americans already are seeing petrol for $3 per gallon at the pump.

“The storms and the resulting price rises have created a sense of anger with consumers and urgency with politicians,” said Robin West, chairman of PFC Energy, the consultancy. Congressmen say constituents are more concerned by rising fuel prices than the war in Iraq or the president's handling of Hurricane Katrina. And analysts fear prices for many fuels are set to climb higher.

The storm cost the US about 5 per cent of US refining capacity, even as another 5 per cent remained offline following Hurricane Katrina. Perhaps more importantly in the short term, however, is the immediate burden placed on the system by last week's massive evacuation of Texas and Louisiana.

It pushed national consumption of petrol to about 6 per cent more than for the week of Labor day, which is considered peak driving time in the US, according to the Baker Institute. That was about 20 per cent higher than normal for this time of year.

Researchers say continued heightened demand will put additional strains on the US petrol distribution system, which was tight even before hurricane season began, with refineries running as close to full capacity as possible. The nation has no refined stores, so the loss of petrol from the evacuation alone could result in higher retail prices.

Kenneth B Medlock III, an economics lecturer at Rice University, said consumer inclinations to keep petrol tanks full can aggravate the situation. He notes even price caps in the 1970s failed to discourage consumers from filling up tanks and left many without needed fuel.

Public commitment to voluntary adjustments to habits and practices is the best short-term solution, Ms Jaffe said. Not only would that prevent another run on petrol stocks but also gain credibility with Europe, as the US asks for emergency refined product relief.

“We cannot just ask for more fuel and let other countries bear the brunt of changed use patterns,” Ms Jaffe said.

Yet refiners have for years resisted taking on the expense of storing stocks, and conservation is politically delicate.

“Telling Americans not to get in their cars is like telling Americans not to eat apple pie,” she notes.

That is why Ms Jaffe and others say that President Bush and the big oil and petrol companies in recent advertisements are soft-pedalling on the call to cut discretionary driving. Mr Bush has simply encouraged car-pooling and reducing unnecessary trips.

The need for the public to conserve could not come at a more delicate time.

Bob Linden of PA Consulting noted that heating oil is going to come into the limelight in coming days, when people begin ordering fuel oil for winter. Refineries that normally would be building inventories of fuel oil have been instead replenishing petrol supplies lost in the hurricanes and the evacuation. That has set the stage for reduced supplies of heating oil that will drive up prices as winter approaches.

“This is peak filling time,” Mr Linden said. “The trend is going to be apparent that fuel oil inventories are going down.”