Even if the peak were 30 years away it would not make any difference. The problem here is that we (the U.S.) are bringing in so much of our oil, both domestic and international, through this one small area near New Orleans. That doesn't have anything to do with how much oil Saudi Arabia has. Even if they can supply oil to the world for decades to come we will still be in trouble if Katrina seriously damages our gulf oil facilities.

So I don't expect this to draw public attention to the Peak Oil problem, rather people are likely to focus more on the specific issues of single points of failure and vulnerability to catastrophic events. The likeliest outcome IMO is that we would try to build more oil unloading ports, refineries and similar facilities, spread out so there is more redundancy and robustness in the system.

The connection to oil depletion is through offshore and deepwater drilling. The depletion has driven the production to more difficult environments.

But the picture of the Peak Oil as a sudden supply disruption is misleading. Katrina is just a local and temporary phenomenon. The Peak Oil means a global and permanent production maximum and steadily declining production after that. The Peak Oil is an absolute phenomenon: the production is at its absolute maximum. Now we have relative supply constraints: production still goes up but not as fast as demand.

By the way, we should look at Russia: it seems to be again in decline. In a couple of months we will see how steep the decline is. Russia is as big an oil producer as Saudi-Arabia so this is really important and could mean the global oil production peaking.  

Things are proceeding as expected in Iraq: the Sunnis have not signed off on the constitution yet. There was a suicide bombing in Israel. Jesse Jackson has offered his support to Hugo Chavez. However, these are not the main geopolitical stories at the moment. Hurricane Katrina is. We normally do not deal with natural disasters, but this one has massive geopolitical implications that must be considered carefully because New Orleans is one of the key points in North America.

The importance of New Orleans isn't Bourbon Street; rather, it is the river complex that drains the United States between the Appalachians and the Rockies. These rivers all eventually flow into the Mississippi, and the last major city on the way to the Gulf and Europe and Asia is New Orleans. If the Mississippi became impossible to navigate for any extended period of time, the consequences for the U.S. economy become incalculable.

The Port of South Louisiana, which runs along the river north and south from New Orleans, handles more cargo than any other port in the United States. It is the fifth-largest port in the world, larger than Nagoya. Much of the port and river are protected by huge levees. If those levees fail, one potential outcome is that the Mississippi, which is notorious for rerouting itself, could do so again -- and do so in such a way that it becomes impassable without massive engineering.

Now, the consensus is that the levees on the river will hold, even if the levees on Lake Pontchartrain do not. In other words, New Orleans might be devastated, but the river will remain open. But there are two dangers. The first is cross-currents, which the levees are not built to contain; however, water levels are low enough that this probably won't happen. The second is the possibility that a large ship -- and there are some big ones on the river -- could hit a levee, breaking through it. Katrina will be ripping ships from their moorings, and this is a real threat.

There is a danger south of the city, near the mouth of the Mississippi. Those exits could shift or silt up quickly. It is assumed that if that were to happen, equipment would rapidly clear up the problem. But consider: If the hurricane hits hard, what will be the condition of the equipment and its operators? What would take a matter of days in normal circumstances could become a matter of weeks or longer.

There is also the issue of Louisiana's oil industry. The offshore platforms are shut down, and most will ride out the storm without problems. But Louisiana has a vulnerable point -- the Louisiana Offshore Oil Port, or LOOP. It is the only facility in the United States where supertankers can dock. There is a real threat, if there are 30-foot surges in that area, that the LOOP could be damaged significantly. That, along with a refinery in Louisiana and one in Mississippi that are both vulnerable to major flooding, could seriously affect global oil markets.

There is a final consideration. If New Orleans is underwater for weeks or months, and most of its people are evacuated or killed or hurt, who will man the ports, warehouses and refineries -- assuming these facilities are functioning? New Orleans is home for the work force that runs these facilities. Grain flows down the Mississippi on barges. It is offloaded into giant storage facilities and loaded onto ships for the world markets. Even assuming that the river can be navigated, those storage facilities may not be available -- and if they are, their employees will be unable to return for work.

These are all speculations at this moment, but they are not outrageous ones. Consider just two. The harvest is just starting in the Midwest. Much of the produce goes down the Mississippi to Europe, Asia and Latin America. If the river is blocked, it isn't going anywhere. Consider the consequences to the food industry supply chain globally. Or consider this: If the United States involuntarily cuts oil purchases, the price of oil will surge in the United States, but globally it will decline. You wind up with almost two markets. Some of this oil can be shuffled around from one port to another, but not for weeks on end.

The consequences of a breakdown in the Port of South Louisiana and the LOOP would have economic consequences far in excess of those from the Sept. 11 attacks, which hit pretty hard. This would affect global food and oil markets. The problems could be solved in days, or may take months to fix. The unknowns at this point are enormous. Katrina may have no effect whatever on trade -- but if its only effect is to displace the population of New Orleans for a few weeks, that will be effect enough on the global economy.

We are going to have a classic short term supply disruption. As absolute supply tightens, you are going to have a situation where a 5-10% decrease in supply could mean a much higher increase in prices due to the lack of elasticity. This could be a good chance to actually measure how elastic demand is to price? How high does price have to go to destroy demand?

Alternatively the cleanest solution to this situation is to have leaders at all levels of government, businesses, etc to cut back gas consumption by 10%. If people were asked to sacrifice, I think they would do it. As a relative optimist, I truly believe that if people thought it would help the nation get through this crisis, they would drive less. All it takes is the right leadership, which we so sorely lack these days.