Hurricane Gustav is going to hit the United States unless there’s an act of divine intervention. Short of a miracle from Heaven, all computer predictions are showing Hurricane Gustav will hit somewhere along the Gulf Coast, anywhere from Pensacola, Florida on the Eastern side to Houston, Texas on the West.
Unless Hurricane Gustav’s path is suddenly diverted, or unless Hurricane Gustav falls apart and becomes little more than a tropical storm or depression, it’s more than likely at least one of the many oil platforms in the Gulf of Mexico will receive some damage, but likely all of the platforms will be closed down in advance of the storm.
As with anything else — snow storms, flooding, Hurricane Katrina, Hurricane Rita, or a bird smashing into the side of one of the platforms — the oil companies are quick to increase prices, citing “costs” and “losses.”
When oil prices are increased, it happens very quickly. On the flip side — oil prices dropping back to pre-disaster, pre-storm, pre-event prices — things are never fast. The oil companies all report profits, and often record profits, during the time they supposedly were dealing with “increased costs” — but managed, through great planning, covered the costs and built in hefty profits, as well. But even when prices begin dropping, I’ve never seen oil or gas prices return to "pre-event" price levels.
In the past six weeks, gasoline prices have fallen from $4.14 per gallon to just over $3.50 per gallon in Northeast Philadelphia. Looking at Hurricane Gustav, along with the development of Tropical Storm Hanna, oil prices and futures are likely to shoot up, with gasoline prices at the pump ending up being $5.50 or more per gallon. They have already started the upward spiral.
This past Tuesday, after the National Hurricane Center predicted Gustav could possibly enter the Gulf of Mexico as a major hurricane this weekend, oil prices shot up $5 a barrel.
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