[DantesPeak]

CIBC has just released a very interesting report, which you can access from their web site:

http://research.cibcwm.com/res/Eco/EcoResearch.html

Click on:
Featured Article: Drilling in Stormy Waters


A summary of the report is here:

Hurricanes threaten Gulf of Mexico oil production - supply likely never to reach pre-Katrina levels: CIBC World Markets
2005-like storms could push gasoline to $5 per gallon

Last update: 9:20 a.m. EDT Aug. 29, 2008
NEW YORK, Aug 29, 2008 /PRNewswire-FirstCall via COMTEX/ -- CIBC (CM: TSX; NYSE) - With Tropical Storm Gustav bearing down on the Gulf of Mexico and most weather agencies calling for an active hurricane season, American motorists should brace for gasoline to spike to $5 per gallon as storms threaten to shut down oil production in the region, predicts a new report from CIBC World Markets.
The report notes that oil production in the rig-dotted Gulf, which has been seen as America's best hope for greater energy self-sufficiency, will be increasingly threatened by severe storms that continue to grow in frequency and strength in the region.
"Only three years after hurricanes Katrina and Rita devastated Gulf of Mexico oil and gas production, an emerging hurricane storm is tracking another potentially lethal swath through America's energy heartland," says Jeff Rubin, Chief Economist at CIBC World Markets. "And with both oil and gasoline inventories much lower than when Katrina and Rita hit, the price consequences could be even worse this time. Any replays of the 2005 storm season could see gasoline prices soar to $5 per gallon."
"There is no debate that at today's oil prices U.S. demand will continue to fall," adds Mr. Rubin. "The question is whether demand destruction can keep pace with the destruction in supply."

MarketWatch

[DantesPeak]

Analyst: Gas Could Hit $5 a Gallon
By DONNA KARDOS
August 29, 2008 12:15 p.m.

A CIBC analyst warned supply disruptions on par with those seen following hurricanes Katrina and Rita in 2005 could send gasoline prices to new records, pushing pump prices to $5 a gallon and causing natural-gas prices to spike.

Because of damage caused by the 2005 storms, Mr. Rubin believes production declines seen since then for the Gulf of Mexico are "now likely irreversible." He also says crude and total oil product inventories are now "significantly lower" than when Katrina and Rita hit, making prices more exposed to potential storm-related supply disruptions. After Katrina, crude-oil futures jumped 10% and gasoline prices briefly surged more than 50%.

Few have taken Mr. Rubin's view about a price surge, with many oil-industry officials and economists believing the markets are better supplied and more resilient today than they were three years ago, and that the world energy markets are in a stronger position to ride out sudden supply disruptions of the kind seen in the aftermath of 2005's Hurricane Katrina.

Regardless of whether Gustav significantly impacts production, Mr. Rubin said "its very presence in the rig-dotted region underscores the vulnerability of U.S. domestic crude supply to climate change." The analyst noted that while American has increasingly relied on production from the Gulf region, the frequency of high-grade storms there has nearly doubled in recent years.

And coupled with the fast-depleting Cantarell field of Mexico's gulf shores -- which Mr. Rubin expects to stop flowing oil in five years -- he sees supply destruction in the American oil markets as being likely to "soon dwarf the modest declines in gasoline and other oil product demand that we have seen, and are likely to continue to see in the future."

WSJ

[TheDude]

Good reads, thanks Dante.

[pup55]

There's kind of a fun report "The Age of Scarcity" on that link that says something to the effect that we will see $200 oil by 2012, the US vehicle fleet will start to decline, and a lot of other interesting economic effects will happen by that time./

Almost Simmons-like in its level of doomerosity.

[Eli]

Good job as always Dantes, really something to look forward to.

[TreebeardsUncle]

This warms the cockles of my heart. I would love to see gas at $5/gallon nationally. Actually I would like to see it at least $10/gallon before very long. That would really serve those obese entitled belligerent Americans right. Imagine the discussing site of seeing them waddling from the Tasty Freeze to the Dairy Queen eating snicker-doodles all the way.

g