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BUSINESS
Oil industry tallies up damage from Gustav
HOUSTON -- Initial inspections of the Gulf Coast's extensive energy complex confirmed Tuesday that Hurricane Gustav was nowhere near as destructive as Katrina and Rita three years ago, but resumption of production and refining may be a few days away, or more.
Oil companies, rig and pipeline owners and refiners spread out across the region to look for damage from Monday's storm, and some were already putting equipment and people back in place to resume operations. The full impact should be known in the next couple of days.
"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.
The approach of Gustav had been one of the last remaining pillars of support for oil prices, which tumbled $5.75 Tuesday to settle at $109.71 a barrel on the New York Mercantile Exchange, a decline of nearly $40 from July.
Gasoline prices fell too, despite the fact that power outages and other effects from the storm have halted about 16 percent of the nation's refining capacity based on the Gulf Coast, according to figures from Platts, the energy information arm of McGraw-Hill Cos. It could be several days -- perhaps as long as 10 to 12 days in some cases -- before those plants are again producing gasoline and other fuels at significant levels.
Gasoline prices fell overnight by less than a penny to a national average of $3.684 for a gallon of regular unleaded, according to the auto club AAA. Meantime, gasoline futures fell 12.78 cents, or 4.47 percent, to $2.7265 a gallon on the New York Mercantile Exchange Tuesday as traders bet Gulf Coast refineries would bounce back and pump prices would continue to weigh on demand.
"If this storm had caused serious damage, you'd see the market reacting very rapidly," said Eswaran Ramasamy, director of Platts' U.S. market reporting.
Many companies were flying over offshore sites in airplanes Tuesday, checking for any obvious damage. One of the next steps will be getting people aboard the offshore facilities for more detailed inspections, including checks of subsea equipment.
Newark, Calif.-based Risk Management Solutions estimated Tuesday that damage to offshore oil platforms and rigs, as well as production interruptions of oil and natural gas, could range from $1 billion to $3 billion.
