Energy secretary warns of six months of high fuel prices

Tags: Katrina, Rita, Marketing, Hurricanes, Economy, Taxes, Gas Prices

USA Today observes today that high gas prices may last six months or more. One notable quote from the article:

"We're going to go through a very challenging time the next six months, is my guess," [Energy Secretary Samuel] Bodman said. "Most of us have viewed energy availability as a kind of right of citizenship," he said, and might have to rethink that as refineries are restarted, pipelines repaired and natural gas processing resumed. "Both in terms of gasoline availability and (prices of) natural gas and heating oil, we're going to have some problems."

Hurricane Katrina swept the Gulf of Mexico and hit shore near New Orleans on Aug. 29. Rita followed Sept. 24, hitting the Texas coast west of Katrina's landfall. The two storms temporarily closed all Gulf oil operations and most natural gas operations, according to the U.S. Minerals Management Service.

Only 2% of Gulf oil production had resumed by the weekend, MMS reported, and 21% of natural gas production. The Gulf supplies 29% of U.S.-produced oil and 19% of U.S.-sourced natural gas.

Combine this with fuel's inflationary effect on prices cited yesterday, and we have a recipe for serious economic problems lasting well into next year. Anyone who is in marketing should be thinking about how to grow their businesses with less driving, more cash-strapped consumers, and higher local taxes. It isn't going to be an easy year.