Furthermore, the Times is reporting that BP doesn't know for how long the the pipelines and pumps will be down.
Effects of the closure:
Once the field is shut down, in a process expected to take days, BP said oil production will be reduced by 400,000 barrels a day. That's close to 8 percent of U.S. oil production as of May 2006 or about 2.6 percent of U.S. supply including imports, according to data from the U.S. Energy Information Administration.
A 400,000-barrel per day reduction in output would have a major impact on oil prices, said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo.
''Oil prices could increase by as much as $10 per barrel given the current environment,'' Emori said. ''But we can't really say for sure how big an effect this is going to have until we have more exact figures about how much production is going to be reduced.''
Another analyst notes in the story that current US crude inventories are 'high', so there might not be an immediate effect on gas prices.
Like Hurricane Katrina and Rita, which forced most Gulf of Mexico oil production to be shuttered in and which damaged many wells and platforms, this could have major ramifications on prices if the closure lasts for more than a couple of days.
Another major problem is that, worldwide, crude oil supply and demand is extermely tight. While MSM analysts believe the $70/barrel oil price is largely due to 'tensions' in the MidEast, this graph by Oil CEO from the Peak Oil blog The Oil Drum suggests a different story:
What we see here is that global price declines leading global supply decreases in previous years, but what we're seeing now is flat to decreasing production in the face of increasing prices.
This, of course, certainly makes Juan Cole's recent post all the more disquieting.
Prudhoe Bay. Iraq. Lebanon. Iran. It's all connected folks.
We live in 'interesting times' for sure.
