As a side-note to all the excitement in New Orleans today, Hurricane Katrina has been making waves in the energy markets. Oil hit $70 per barrel in overnight trading last night. Gasoline futures topped $2 per gallon. Natural gas prices spiked as well; at about this time last year, they were at about $5.50 per million BTU, but today they’re over twice that high.
Prices may well decline in the aftermath of the storm, as the damage is assessed. But pump prices throughout the US may well be affected going into Labor Day weekend—especially if Gulf Coast refineries sustain any damage.
It seems I never get tired of saying this: the Northwest’s dependence on fossil fuels—particularly oil and natural gas—shackles our economy to forces over which we have absolutely no control. The Pacific Northwest’s oil comes mostly from Alaska; much of it is refined in Washington and BC. Still, we’re part of a global energy market, and price jumps anywhere else have ripple effects here. Which means that a single hurricane, political shock, or terrorist incident in any major energy producing or refining part of the world now has the potential to siphon millions of dollars out of the region’s economy. It’s high time we recognize that fact—and long past time for us to do something about reducing our economy’s vulnerability to, say, freak storms in the Gulf of Mexico.
Update: This Seattle P-I article says much the same thing.