Get ready for an oil "problem"

Houston ship channel



Scanning through cable TV and caught a nice discussion on CNBC related, I think, to this:

Rita was churning toward the Florida Keys this afternoon and could enter the Gulf of Mexico in the next few days and expand into a storm perhaps as dangerous as Katrina. Worse, it might come ashore in Texas or western Louisiana. That would threaten at least four major refineries and an oil and gas pipeline infrastructure that was hardly bothered by Katrina.

The oil markets freaked. Crude oil jumped more than $4.35 a barrel or nearly 7% to $67.35, the biggest percentage change in crude oil ever. Gasoline, heating oil and natural gas prices all jumped more than 10%.

The stock market reacted badly. The Dow Jones industrials closed down more than 84 points, wiping out Friday's 83-point gain. The Dow had been down more than 110 points. The Standard & Poor's 500 lost nearly seven points, and the Nasdaq Composite gave up more than 15 points. Decliners outnumbered advancers 2 to 1.

More to the point,the Houston ship channel which runs from Galveston up to where Buffalo Bayou turns into a small river, is refinery dense, and there are refineries in Corpus Christi and all along the Texas coast, which means that given the lack of redundancy in refining, there could be another shortfall in refined products if Rita hits Texas hard. And, as the guests pointed out, there is also a shortage of oil tankers which could be used to import refined product from refineries in Europe. And the New Orleans and lower MIssissippi refineries could also be impacted.

A perfect storm. Nuclear power and electric cars anyone?

Photos of Corpus Christi ship channel (bottom 3) from here and the Houston picture from here. More when I can get the transcript.

UPDATE: Previous post on tanker shortage here and on refinery shortage here and here.