Florida Storm Damage and U.S. Oil Supplies
ALEX CHADWICK, host:
Oil prices jumped to $68 a barrel today. Analysts say the reason for the jumpy prices: Mother Nature, namely a category 1 hurricane, Katrina, upgraded from a tropical storm today. Katrina is bearing down on the southeast coast of Florida. That could mean damage to oil rigs in the Gulf of Mexico. And, as NPR's Eric Weiner reports, hurricanes have a history of moving oil prices.
ERIC WEINER reporting:
Florida has swung into full hurricane mode.
(Soundbite of news program)
Unidentified Man #1: You're watching a special edition of CBS 4 News, tracking tropical storm Katrina.
WEINER: Local TV stations have switched to blanket and breathless team coverage. Schools are closed. Stores are crowded with people stocking up on supplies: food, water, batteries and cigarettes. Florida Governor Jeb Bush has declared a state of emergency. What that does, among other things, is help protect Florida residents from price-gouging. People can call a tip line if they feel they've been overcharged.
Unidentified Man #2: 1 (866) 9-NO-SCAM is our hot line number. There are people there to answer those lines.
WEINER: But the storm could affect more than just Floridians. It's expected to head towards the Gulf of Mexico and possibly disrupt oil production there. That fear has already led to a small spike in oil prices. In fact, when it comes to the oil market, or any market, perceptions sometimes matter as much as reality. Tim Evans, an analyst with IFS Energy Services in New York, says fear is not the only human frailty that can move markets.
Mr. TIM EVANS (IFS Energy Services): It's always sort of a balance of fear and greed. It's, you know, fear on the part of those trying to reduce their vulnerability to the storm, and then greed on the part of those who are long this market and happy for any excuse to run it higher.
WEINER: Evans says that fears of this latest storm, Katrina, are overblown. Katrina is expected to miss the Gulf of Mexico's oil rigs, which are designed to withstand hurricane-force winds, but, says Evans hurricanes of years past have affected oil production and bumped up gasoline prices.
Mr. EVANS: In 1998, we had a hurricane named Georges that was not that severe in terms of wind force, but it buried an oil refinery in Pascagoula, Mississippi, four feet deep in sediment. And the refinery was shut for about four months.
WEINER: Katrina is not a killer storm, says Evans, but it is a wake-up call from Mother Nature. This has been an unusually busy hurricane season. With 11 storms already, meteorologists say there could be 10 more before the hurricane season is over. Eric Weiner, NPR News, Miami.
CHADWICK: I'm Alex Chadwick. Stay with us on DAY TO DAY from NPR News.
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