Meter Maid Dominant

by Yule Heibel on September 22, 2005

According to news reports from all ends of the political spectrum, Hurricane Rita is set to have a huge impact on US oil production. Global Public Media notes that on Wednesday night,

…Hurricane Rita was on course to make landfall south of the island city of Galveston on Saturday morning. By that time, wind shear and passage over relatively cooler pockets of the Gulf, may push the hurricane back to Category 4. But all that means is that cities near and on the Central Texas coast, which are home to about 25% of U.S. oil refining capacity, will be hit with a storm similar in power to Katrina.

Bill Greehey, Chairman and CEO of Valero Energy Group, the largest refiner in the US, noted that there are still four refineries shut down in the aftermath of Hurricane Katrina’s passage. He called Rita’s potential impact on US refineries “a national disaster.” [More…]

Greehey said in the interview that gas prices could well go above $3 per gallon in the US, adding this: “You’ve got refineries that will start shutting down in anticipation of the hurricane, and then if any of them have permanent damage, we’re going to be dependent on imports. Following Katrina, this is really serious.”

Bloomberg‘s reports are equally grim, noting that Rita threatens “the nation’s biggest concentration of refineries.” The US has 144 refineries, and 25 are located in Texas. All but seven of these are located in coastal towns, which means that all the people involved in operating and tending the refineries have evacuated, and may be facing destroyed homes when they return. That will add to the difficulties of getting refineries back on track, providing that Rita doesn’t take them out.

Since the Texas refineries have battened down and shut down in preparation for Rita, Latest Futures News notes that right now, pre-Rita, 14% of the US’s refining capacity is offline when you add the Texas facilities to the Louisiana facilities still closed in the wake of Katrina. The markets and financial massage therapists are cautious:

Analysts predicted the biggest impact would be on products, as lost refining capacity aggravates a shortage of refined fuels, while overall crude stocks are comfortable. [More…]

Canada’s National Post is sounding an equally strong warning note:

Martin King, commodities analyst with FirstEnergy Capital Corp. in Calgary, said Hurricane Rita will probably compound an already-worrisome tightness between supply and demand in the North American natural gas market heading into the colder months. “We are short on supply and there was a real worry out there we wouldn’t be able to fill gas storage adequately before the heating season. That fear was heightened and magnified by Katrina and now it’s sort of doubled in terms of what Rita could or could not do.” [More…]

None of the above reports mention that fuel shortages could have an impact on the upcoming harvest, too. It’s not just the price at the pump and what it will cost to drive to work or to the mall: our entire industrial agricultural complex is dependent on petroleum, from soup to nuts. On the more radical left, however, the effect of diesel shortages on agriculture is a topic; see InfoShop News:

Fully 30% of all US refining capacity is in the target zone. Perhaps most importantly, almost every refinery capable of producing diesel fuel is in immediate danger. This promises (especially in the wake of Katrina) a devastating and irreplaceable shortage of the diesel fuel needed to power America’s harvest of grain and food crops this month and next. Without diesel fuel to power the harvesters and combines, crops may be left to rot in the ground presenting a double whammy: food shortages (with prices that may treble or quadruple) and export defaults negatively impacting the financial markets and trade deficit. [More…]

This article also mentions the South Texas Nuclear Project nuclear power plant near Bay City, reported to be in Rita’s direct line of fire. It was through my search for information about Rita’s potential effect on the nuclear power plant — which has two reactors — that I found all of these other articles that mainly address the economics of oil prices. But let’s not forget that there are nuclear power plants, too, and that these will also be offline, temporarily or …not so temporarily. Note that officials promise that the South Texas Nuclear Project is built to “withstand” a Category 5 hurricane, but of course that has never been tested in the field, so to speak. The nuclear power plant needs electricity to keep the fuel and the spent fuel storage cool, and if its own power is disrupted, it gets power from the grid, and that, if the grid is disrupted, it will rely on diesel fuel generators to keep the cooling going. Hmmm, back to diesel… And what if all those backups fail? Let’s hope they don’t, but you have to wonder whose stupid idea it was to build a nuclear power plant in hurricane country. Probably the same people who site nuclear power plants on earthquake fault lines…

But really, now, if that wasn’t enough for you and you’re still happy-happy-happy, consider this, too, and consider that human stupidity seemingly has few bounds:

Officials at facilities that handle sensitive biological and nuclear materials began preparing Tuesday for Hurricane Rita’s projected hit on the Texas Gulf Coast.

One of the few certified U.S. labs handling the world’s most infectious, lethal viruses is at the University of Texas Medical Branch at Galveston, which is less than a mile from the Galveston seawall. [emphasis added]

Lab director Michael R. Holbrook said workers destroyed lab cultures in which viruses were growing on Tuesday and will begin packing the lab up on Wednesday.

The remaining viruses will be sealed and locked in freezers. Then, if Rita still threatens the Galveston coast on Thursday, the lab will be fumigated with formaldehyde. [More…]

I’m not able to second the closing statement made by the author of the InfoShop News article I cited above — a taste of that statement is conveyed by the article’s title: Storm May Be the Coup de Grace for the American Economy — but one really does wonder how much more foolishness we can absorb…

It’s almost grotesque that the name “Rita” is probably best known, at least to a certain generation, as the “lovely meter maid” from the Beatles song. If Rita does its worst to the oil industry and our dependence on cheap energy, we might all sing that song while we ponder our parked cars.

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