Beyond Petroleum

Brian Siu
September 02, 2005

Brian Siu is an energy policy analyst at the Apollo Alliance.

While it is difficult to see beyond the incalculable suffering caused by Hurricane Katrina, the impact on U.S. fuel supply is undeniable. For days, we watched the storm move toward Louisiana’s oil and natural gas operations. As feared, the storm disrupted a tenth of U.S. refining capacity and 25 percent of oil production. Now, analysts expect gas prices to squeeze to $4 per gallon. At this time, it is difficult to assess the price spike’s duration because the extent of structural damage is unknown. What is absolutely clear, however, is that too much reliance on a single energy source is a dangerous thing. As Katrina illustrated, supply interruptions are beyond our control, and without alternative options, there is no safety net to suppress price movements. Instead, we’re given pronounced volatility and an economy that is vulnerable to natural or man-made disruptions.