Follow LA Observed on Twitter here
Oil prices are plunging this morning as the hurricane that everyone had been bracing for is proving to be less serious than feared just a couple of days ago. In electronic trading, crude is under $112 a barrel, down around six bucks from Sunday. That alone speaks volumes about the lessening of concern within the oil world (and these folks don’t rely on Wolf Blitzer for their information). Keep in mind that production and refining operations were shut down over the weekend, and it will be a few days before the oil companies can assess damage. Here's how preparations have changed since Katrina, as reported by the NYT:
The hurricane represents the first test for oil company executives who have said their platforms are far more storm-resistant than they were three years ago. More anchor lines have been installed on rigs and platforms, and equipment has been raised higher out of the water. Many older platforms that were paralyzed by the 2005 storms remain out of commission, while new stronger platforms have been constructed. Some companies took several months to restore their operations after the 2005 hurricanes, in part because their electrical and diesel generators, communications and other logistical systems were damaged and because key personnel were preoccupied with having lost their homes in the storms. But the companies say that this time logistical systems have been improved along with support for staff members whose families may be affected by the hurricane.
Insurance losses from the storm will be "significantly smaller that Katrina," according to Robert Muir-Wood, head of research for Risk Management Solutions, which specializes in projections for catastrophes. Speaking on Bloomberg Television, he says that Gustav will cause "a few billion" dollars of losses. Katrina caused a record $41.1 billion of insured losses.
Updated post
Mark Lacter created the LA Biz Observed blog in 2006. He posted
until the day before his death on Nov. 13, 2013.