As Tropical Storm Isaac is forecast to turn into a Category 2 Hurricane before its makes landfall near New Orleans, it has caused large oil firms to shut many of their platforms in the Gulf of Mexico. This short-term reaction to the storm is not the most serious one for the U.S. economy. The more immediate problem is that refineries around the Gulf will be closed.
Many of these refineries are used to provide gasoline, so the amount of time they are off-line is critical. Gasoline futures have risen steadily over the past several days, and speculators believe that gas prices could rise by 10 cents a gallon in the short term. There is also a chance that some refineries many be damaged by Isaac, which could keep gasoline production down for some time.
Douglas A. McIntyre
Filed under: 24/7 Wall St. Wire, Oil & Gas