The water is still rising

With a major break in the 17th Street Canal levee running between the city and Lake Pontchartrain, water is going to continue to flood into the city until the two levels reach the same height, or the breach is closed.  But getting the breach closed is going to take heavy equipment that must be taken to the site, and we are back to a time issue.  And also a people issue, since as has been noted in the comments section, local residents right now have a lot more things to worry about than just getting back to work.

With this level of devastation, predictions of short-term resolution are becoming increasingly unrealistic.  With the LOOP unavailable and the distribution networks also closed, the impact on gas will slowly spread throughout the country.  We highlighted the problems of gas supply in South Florida, because this is already being discussed, and they are heavily dependant on the refineries around New Orleans, but the same holds true in the Midwest in general.  

Until an hour ago the Times Picayune was the best source of information but the rising water has driven them, from their building, though the site is still up, but under heavy traffic. (Thanks Stuart).

does anyone have latest info on LOOP damage assessment?  projected reopen time frame?  i live in the NW, far from the action, and i'm thinking about stockpiling gas....
An aerial inspection did not report too much obvious damage to the LOOP facility itself but the docks, and facilities that service the offshore oil structures has been devastated, and there are losses in the supply fleet that is also needed (both helicopters and boats).  I was also reminded that most of the management of these operations occupies office space in New Orleans, so it may be that some amount of time has to be set aside for those running the operation to find a new place from which to do that.  And the phone lines are understandably jammed or non-functional.
get busy - J emailed me - he is filling drums now as he expects prices to hop soon.
Witness a sobering assessment by a noble, well-informed mayor of New Orleans.  Mayor Ray Nagin updates state of the city. Click for the story.

With such widespread damage, even if they turn the power on tomorrow, all of their workers have been displaced for weeks if not months.  No, this is a long term breakdown, y'all.  They're talking about housing tens of thousands of refugees on an ongoing basis.  Not exactly conducive to "Honey, I'm going back to work on the rig now, have fun with the kids!"

I just saw on CNN that the president is ending his vacation two days early.  How nice of him to come back to the office...

"Break in 17th Street Canal Levee is now 200 feet wide and slowly flooding the City of New Orleans. Huge sand bags are being airlifted to try to stem the rush of water in that area. The expectations are that the water will not stop until it reaches lake level."

You all have probably seen this. I'd like to offer a possibility of something that may happen.

If it really does get to lake level, does an argument start to grow about whether or not New Orleans is simply abandoned? At what point does the cost of rebuilding outweigh the cost of leaving the city be. It seems farfetched for me to say it, but it's something I've been thinking about for a while.

Not to mention, the risk of future damages due to future storms and potentially global warming (we can all debate it's factuality but even if it's a % chance, it's still a quantifiable risk).
when was the last time a city got completely destroyed? and not repopulated.  Pompey?
Well, when Atttila the Hun invaded Italy, he razed the coast city Aquileia. The survivors never returned to the city and started to live at the sea isles and lagoons near the coast. So, Venice was set. The name "Venice" come from a Latin phrase that can be translated as "Are you here too [hiding from the huns]?"
Managua, Nicaragua was destroyed in the 1972 earthquake.  My ex-wife said that the damaged buildings were abandoned.  This article states that only recently have these properties begun restoration.

My wife and I had this very conversation this morning.  Honestly, I don't know at what point you abandon a major US city that's been devastated by a natural disaster.  Clearly, there is such a point, but my gut instinct is that as bad as things are in New Orleans, we're not there.

Frankly, this is a classic case of a situation that can't be judged purely on economic terms.  How do you tell an entire city of that size, and particularly one with that much history and unique culture, that their city has been declared dead because the dollar cost to rebuild it is too great?  I honestly don't think I could do it, at any price.

Sunk Costs?

You'd have to have substantially more destruction to warrant abandoning the whole city.  No matter how bad the destruction is now, there's still lots of value there.  Bad joke, but the "sunk costs" of an American city are HUGE.  All the roads, for example.  The sewers, power grid, pumping stations, and the buildings that will survive with only moderate-to-light damage.  Some infrastructure will be damaged, but much of it can be repaired for much less than replacement cost.  Ditto for housing and businesses.  Wood frame houses will be destroyed by flooding but many other structures may need only a long hose, some new drywall, and electrical and plumbing repairs.

There's over 600,000 people in the NO area - they can't all leave.  And although the flooding will hit the old center of the city hardest, look on Google Earth - the suburbs of NO extend outward quite a distance, and those on the south side of the river or farther west will escape with little damage beyond that done directly by the hurricane (and direct hurricane damage is a risk no matter where you are on the Gulf Coast).

In any event, lots of folks will probably decide to move away, even if only a short distance up-river or to higher elevations.  For those that stay, the costs will rise, both emotionally due to continued anxiety and loss, and economically due to increased flood-control and emergency contingency costs - like LOTS more shelters - and falling property values.

It would, however, make sense to divert all or part of the Mississippi River into a new path away from the urban area and reduce the overall threat the city faces.  That would require LOTS of new or moved infrastructure, but still less than moving the entire city.

What good would redirecting the Mississippi do, when it looks like Lake Ponchartrain was the problem?

NO faces threats from both the Miss. River and the lake, on opposite sides.  The levees along the River are actually higher than the levees on the lake.    If the threat from Miss. River floods was removed (or substantially reduced) more resources would be available to deal with the lake.

From a blog at a New Orleans TV station.
New Orleans police say looting is out of control in many parts of the city. Officials are focusing on the rescue effort, but a crackdown on looting is expected after the martial law declaration.
New Orleans is under martial law, according to state officials. The declaration is imposed to restore order in times of war and emergency. It could be weeks before displaced residents are allowed to return. -- WDSU chief meteorologist Dan Milham
The Superdome is filthy. Garbage bins are overflowing with trash and the bathrooms are filthy. In addition, the plumbing does not work. City officials say conditions are "miserable."
Residents are urged to avoid drinking the water in New Orleans. It is not safe.
Definitely seems like it's going to be weeks just to get the workforce back in place at Louisiana companies, and weeks to get power. I'd guess commercial operations in the hardest hit areas are probably going to be impacted for a month. With 10% of refinery operations down there, if half of it takes two weeks to come back, and half of it takes a month to come back, and stocks already on the low side, seems like we'd have the equivalent of an oil shock.
Sounds like bad going to worse.  WIth that much water and no sanitation, public health concerns will mount.  Not good news if people are abandoning some of the city hospitals.
Why is so much space on this site devoted to the storm?

I'm sorry to be a little brash and I'm probably sounding insensitive here but the mainstream media coverage is very extensive anyway. I thought the main purpose of this site was to discuss issues related to peak oil.

While some production and refining capacity was definitely affected by the storm, the overall impoact of this catastrophe on the issue of peak oil and sustainable development is insignificant... unless of course one presumes that New Orleans is going to be rebuilt in an environmentally sutstainable way. Something I'm not holding my breath for.

The problem is the country (even the world) has no spare capacity.  Even a small disruption causes shortages for everyone.

The storm brings peak oil into our economy right now rather than some time in the future.

     The United States has just lost between 1 and 2 mbd of oil supply for an indefinite period.  For parts of the country, such as South Florida, this may mean that there will be significantly less gas and other fuel available, relatively soon, than is needed for the existing economy.  This is very much a related issue to our underlying theme.  What we, and those who are posting to this site are contributing toward, is an overall understanding of the current situation and how it will affect supplies, since this will model the reality of what might happen with the onset of Peak Oil, which this may presage.

And while we do retain our focus, there is much to learn about what is happening now, and in understanding what is going on.  We are grateful for the information we are being sent, and are trying to pass it on in a useful format.

I think the reason is at the current time we are in a very tight demand supply situation this could be the tipping point for something much bigger. If this turns out to be as bad as it could be we might be looking at the turning point in the US economy and therefore possible demand destruction and this will affect peak oil.

I like to think of the bell shaped peak oil graph an abstract concept and in the real world we are unlikely to see such a uniform decline. What I believe is more likely is a tipping point from which we have demand destruction and as we recover from the economic downturn oil supply might well have started to decline.

(a) the consequences could be enormous through the end of this calandar year at a minimum;

(b) it's hard for most to concentrate on much else when an entire metropolitan area--that happens to be a center of the energy sector--is in the process of getting washed off the face of the map; and

(c) if P.O. was to be 2005/06, this may very well be the kick-off of the crunch ahead.  

Oh, and yes your comment is rather insensitive given the number of readers (such as myself) with connections to this city.  

i kinda agree with cezar,  there are plenty of other things
to discuss that are more oil focused.

i would love to know more about the platforms and refineries in
the area.  where they are and what their production capacity is.
(sorry if you all have covered this already)

also could someone post some links that give more detail about

demand is the key for me and I really don't see peak oil
being rational problem because (as prices rise) the poor people
of the world will not have the money to buy the oil while the
rich will still be using it.  and the global production rate will
be above 75mbd for the next 10 years even if we hit hubberts production
peak today.

there could be emotional problems where consumers freak out and
horde gasoline or investors freak out and crash the stock market
but that is nothing new.

i caught the tail end of a special on bloombery tv about the
'robust demand' but i would like to know some other opinions

let's do some number crunching here...
as of last week, the EIA reported USA Gasoline Stocks at 194.9mb (million barrels).  this is after a 3.2mb draw down.

how long will it be before USA starts rationing?

the SPR is full and stands at 700mb.  but it's 2/3 heavy sour which we don't have the capacity to refine.  so this means it's only 1/3 light sweet ~ 200mb.

we are down 1-1.5mb crude oil production daily.  we have lost oil import capacity due to LOOP outage, which accounts for ~15%(correct if i'm wrong) of US oil imports. the US imports 60% of 20mb (daily consumption).  20mb x 0.6 x .15 = 1.8mb.  so really, we are out apprx 2.8-4.1mb of crude oil and that is HUGE!

US gas demand, as of last week, stood at 8.623mbd.

analysis anyone?

It helps if we know how much gasoline is consumed daily.  The best I could do in three minutes was find this link  which reports that in 2003 consumption was about 9 m bbl/d.  This may not be the right number...But if it is, we have about 21 days of gasoline stocks.  Keep in mind that the real number is higher than the annual average EIA is reporting here.  Because: (1) consumption has increased since 2003 and (2) we are ending the peak driving season.

the SPR is full and stands at 700mb. but it's 2/3 heavy sour which we don't have the capacity to refine. so this means it's only 1/3 light sweet ~ 200mb.

That's shocking -- is it really true? What's the point of an SPR if 2/3 of the oil is unusable in a short-term emergency?
It's probably not unusable in all emergencies, only those that happen to affect refining capability -- like this one did.
yes, the ratio of heavy sour crude in the US Strategic Petroleum Reserve (SPR) has been steadilly increasing to the point that it now represents about two-thirds of the SPR (415 of 699mb)
This board has an unfortunate tendency to promulgate myths as conventional wisdom. The latest one is that sour oil is useless and can't be refined in the U.S. That's not true, the U.S. has substantial sour oil refineries, and they are in the process of converting others to refine sour. Much of the crude oil coming into the U.S. is sour. Alaskan oil is relatively sour, as is the Mars blend from the gulf. All of this oil is refined and used here in the U.S. The sour oil in the SPR is definitely intended to be used in case of emergency. Another strategy to make the sour oil more usable is to relax some of the air pollution standards, which might reasonably be part of a response to a gasoline shortage.
i want to clarify a previous post of saying the US don't have refinery capacity for heavy sour oil.

the US has refinery capacity for heavy sour oil.  however, that capacity pales in comparison to the US's refining capacity for light sweet...

Well oildrum is taking this topic in notice because it is by in large oil related in every way..Hello where you been?
I'll make a bet that many of the National Guard troops in the NO area failed to show up, they probally got out before the storm came and before they were alerted.
I read the state of LA, is in debt already and this will big time enlarge that ..Certainly the Fed will bail them out.
I was in NO a few yrs back. From what I seen on the various web sites I think it best to abandon the city. For the reason as many above have stated , future storms, below sea level, already destroyed, too much to fix. Its like this If I had a 20,000 dollar home in a swamp destoryed by a storm do I invest 20,000 more to rebuild it or maybe look for a home in a high dry area for the same money? here's an interesting post I am borrowing from a poster below from Seems the situation is bad>  Burt Coleman

I've been in touch with people who work for the city government and stayed behind. To make a long story short, all hell has broken loose. They are starting to evacuate people to Baton Rouge ASAP because the water from the levee breaks has completely flooded downtown which is right next to the French Quarter. The levee break was about 6-8 miles away from downtown so that means tens of thousands of homes are underwater and potentially thousands of people are dead. To make things worse, the Twin Span bridges have been completely destroyed which is the main interstate 10 link. That means there is no direct route into New Orleans. God help NO.       

The Governor wants to clear out anyone left in New Orleans proper:

Rising water, lack of power, water and sewer, etc.


the current high price of oil is a result of the impending peak.  As you know, demand has finally grown to exhaust all previously-existing spare capacity (mostly Saudi), and depletion rates mean that new production probably won't keep up.  Peak-niks (peakers?) generally regard the coming shortage as a trigger for economic problems and probable recession.  

Katrina may cause a large and sustained oil or gasoline price spike, lasting until (or - heavens - beyond) the onset of the winter heating-oil season.  If that happens, the US economy will probably slip into recession next year.  The housing bubble may likely burst in some over-heated markets, especially in the most-distant suburban or exurban long-distance-commuter areas.

So what of the peak?

  1.  A US recession would sharply reduce US oil and gasoline consumption, reducing oil prices but also pushing the peak some distance into the future.

  2.  Lower oil prices may reduce the push for rapid expansion of drilling in 'frontier oil' regions and the exploitation of other non-conventional sources (tar, shale), preserving those reserves for the future.

  3.  A recession will in effect be a postpone-ment of consumption, giving the global economy time to adjust to rising oil prices by adopting energy conservation measures, both through increased efficiency and through substitution with alternative fuels.

  4.  Recession in the US would have major follow-on effects in the other major oil-consuming economies which until now have been growing solely by exporting to the debt-happy American government and consumer.  While they would be hurt by slackening US import demand, lower energy prices (from reduced US demand) would make it easier for countres like China to foster a growing domestic market.

Is that a good answer?


More generally, though, I see this site as an oil-and-energy-focussed blog-and-comment-forum that examines current events in the context of energy supplies, esp. fossil fuels.  Katrina's effects on US energy will be huge, and the already-

Or, as the header of every page of the blog says,
"This community discusses myriad ideas related to Hubbert's Peak/Peak Oil, sustainable development and growth, etc., and the many implications of these ideas on politics, economics, and our daily lives."

- Silent E

As much as I buy into the concept of peak oil, and have structured my life and finances accordingly, even I don't know that peak oil is imminent.

I think it may be but we'll only know after the fact.

Other comment I wish to point out: recession WILL NOT DECREASE DEMAND.

Only a DEPRESSION will.

Check history and you'll see what I mean. Recessions, aside from the forced demand cut diet of the OPEC oil embargo, merely reduce demand growth, not demand itself.

Recession and depression are two different animals.

As I have posted before, I agree with you that the connection to Peak Oil is tenuous at best. Even if Saudi Arabia had a century's worth of oil it wouldn't make much difference. It would still be weeks or months before any increase in overseas production could make its way to the U.S. due to the long distribution chain. And whether Saudi Arabia will peak this year or in 50 years, they only have a limited number of wells built right now (they have fewer than 300 oil wells in the whole country!) so they couldn't ramp up their production all that much anyway.

Interruptions to oil supply are always going to be a problem, Peak Oil or not. Look what happened in 1979 when the Iran-Iraq war caused interruptions. Oil prices shot up, gas lines, all the manifestations of a shortage that we might expect to see today. Yet we were decades away from Peak Oil. The fact that there was plenty of oil in the ground didn't make any difference.

Looking at the effects of Katrina through Peak Oil glasses presents a misleading view. It is a localized and temporary phenomenon, which may cause inconvenience for all of us. But compared to the hardship and suffering the people in that area are going through, the national and global implications are minor.

Oh, and my apologies, but I have to leave on a trip for a couple of days, and while I will try and add further comments,  ProfG and Ianqui will continue the great work they are doing on keeping us up on what is happening, so you may not really notice.
specific production capacities for each platform is too big a number for you to deal with. there are over 3500 platforms in the Gulf of Mexico. If you do not live anywhere nearby, and simply do not care about the people affected, then I bet you WILL care when the price of gas bites your ass.... If numbers make you get all tingly, then go to RigZone - they will have some for you to play with.

If any of you bloggers are as insensitive to the misfortune of others as some who appear in this thread, then I fear we are all in for a very rough time, here in the shadow of the depletion curve...

Another thing to keep in mind is that the North American ecology is not stable against mosquito borne epidemics. One of the major barriers against mosquito borne malaria, encephelitis, etc, is that the mosquitos are kept down by drainage and general picking up things that collect water, and by people being in their houses watching tv at the prime feeding times of dawn and dusk.
If the power is out, and no one is draining pools of water or collecting old coke cans that are full of rainwater, then we will have more mosquitos.
This may sound like a minor problem compared to rebuilding New Orleans, and it is, but it is still a problem.
It was a problem in Punta Gorda after Charlie, though they nipped it in the bud with aggressive treatment.
thank you for the demand numbers and i totally forgot about
the mosquito issue.  

this is my first time on this blog and i am happy to see
so many educated people.

i spent some time on wikipedia and saw that
oil shortage does not always lead to recession

i mean a recession has to do the with emotional spending
of about 200 million people so it is a little silly to
generalize about a possible recession in the USA.

but i can agree with recessions in poor countries that
can't afford the high oil costs.  but are we going to see
goverment rationing or price controls or consumers in
lines at the pump?

no.  remember when iraq invaded iran? remember the panic
it caused? well it never happened because the ignorant
consumers had no idea and Pres. Regan was defense
spending and tax cutting.

the only wildcard i can see is the goverment not being able
to control a consumer panic.  and the consumers of today
are so ignorant and isolated that they should be easy to control.

If people can't get oil there's going to be a recession or depression, no matter how good they feel. How can they spend money at stores if they can't get to the stores, and the stores can't get goods delivered to them?
Meanwhile, looting broke out in New Orleans' Canal Street, the main thoroughfare in the central business district, which was being described as a literal canal this afternoon.

Looters waded through hip-deep water and cleaned out abandoned clothing and jewellery stores, sometimes in full view of passing police officers.

At a Walgreen's drug store in the French Quarter, people were seen running out with baskets and coolers brimming with soft drinks, chips and diapers.

The crowd scattered when a young boy noticed police and screamed: "86! 86!" -- the radio code for police.

One man who had an estimated 10 pairs of jeans in his arms was asked if he was trying to save items from his store.

"No," the man shouted, "that's EVERYBODY'S store."

Another woman dismissed the suggestion that she and her husband were stealing from a Winn-Dixie supermarket as she left with a plastic bag filled with items.

"It's about survival right now," she told AP.

"We got to feed our children. I've got eight grandchildren to feed."

Residents weren't the only people raiding abandoned stores.

Two police officers stood guard outside a drug store on Canal Street as Ritz-Carlton Hotel employees packed large laundry bins full of medication, snack foods and bottled water.

"This is for the sick," Officer Jeff Jacob said.

"We can commandeer whatever we see fit, whatever is necessary to maintain law."

Just taking notes ...

I believe the real problem will come a the end of your winter.  Currently Natural Gas is stored undergroud during period of low demand for the coming winter.  If Katrina disrupts this storage of NG then there might not be enough gas to ensure continued supply until next summer.

This may not seem like too much of a problem however the main issue is pilot lights and unattended gas installations such as heaters and boilers in homes and factories that depend on a constant gas presssure to keep going.  If the pressure is allowed to fall then these installations may not restart or restart with an explosion when the gas supply is restored.  There is no way in the world that all the gas appliances in the country can be visited to make sure that they restart correctly.  This could be a major problem.

Apparently last winter you only just scraped through - how will it be this winter?