Gustav is Giving the Gulf Coast and Oil Prices Cause for Concern
Wednesday, August 27, 2008PAUL KANGAS: The price of oil spiked almost $2 in New York trading today, settling at $118.15 a barrel. That as tropical storm Gustav headed toward the oil-rich Gulf of Mexico. It's currently on track to reach the mouth of the Mississippi River by Monday, as a hurricane. As Jeff Yastine reports, preparations are underway in New Orleans and the rest of the Gulf region.
JEFF YASTINE, NIGHTLY BUSINESS REPORT CORRESPONDENT: The latest forecasts call for Gustav to make a slow northern turn through the remainder of the week, churning towards Louisiana and Mississippi, nearing their coasts by Monday. Royal Dutch Shell and other oil firms have already begun evacuating non-essential workers from their platforms in the Gulf. Energy trader Anthony Grisanti says oil prices could skyrocket if Gustav targets the Gulf's production facilities.
ANTHONY GRISANTI, OIL TRADER, GRZ ENERGY: If we're talking a direct hit, category three into the oil production facilities, which are right outside of Louisiana, you're talking probably $140, $150 a barrel. If there's any sustained damage and we won't know that until after it's through that area, then you're talking $160 a barrel, $170 a barrel.
YASTINE: The irony of Gustav is that the forecast track shows it threatening New Orleans just as the city marks the anniversary of hurricane Katrina. That storm and its resulting floods devastated the city three years ago this Friday. Louisiana Governor Bobby Jindal told reporters he's watching the storm and could declare a state of emergency as early as tomorrow. Louisiana has already readied 700 buses for evacuations and this weekend could activate a contra-flow highway system, where all lanes lead motorists away from potential storm impact areas.
GOV. BOBBY JINDAL, (R) LOUISIANA: I want to emphasize to our families out there, the state is doing everything we can to be prepared. They need to be prepared, as well.
YASTINE: For New Orleans, the key is the region's network of levees, which failed during Katrina and flooded the city. The Army Corps of Engineers says it has set up triple-redundant controls on pumps and water- control systems. Colonel Jeff Bedey says it's part of a multi-year effort to build up the height and stability of the levees.
COL. JEFF BEDEY, HURRICANE PROTECTION OFFICE, USACE: I'm not prepared today to say what level of storm we can protect against. I can tell you the system is stronger today than it was pre-Katrina.
YASTINE: Insurers say they, too, are prepared for any financial impact, should Gustav turn into a major hurricane. Jean Salvatore is a senior vice president for public affairs with the Insurance Information Institute.
JEAN SALVATORE, SR. VP PUBLIC AFFAIRS, INSURANCE INFORMATION INST.: A lot of planning goes into the logistics of getting claims adjusters and others into disaster areas and this planning is really all year round in anticipation of hurricane season. But you just never know when a disaster's going to strike, so they're always thinking about this.
YASTINE: That planning could be put to the test in the coming days as Gulf residents and businesses wait on Gustav. Jeff Yastine, NIGHTLY BUSINESS REPORT, Miami.
