I'll try here to clar up som misconceptions about the oil and gas biz that seem rampant in the body politic. See below for more on:
Drilling and Production Technology
The Mississippi Canyon
I realize this will raise more questions than it answers. Ask away. I will try to address them in subsequent posts.
Gas Prices. Modern refining technology allows a gallon of crude to be turned almost completely into a gallon of gasoline. So at $55/bbl, gas coming from a refinery is $1/gal just for the raw material. The rest is tax, distribution, and the insane amounts of energy required to disassemble the carbon chains and reassemle them as gas. Gasoline is a commodity, subject to the whims of supply and demand. Currently global demand is outstripping supply by about 10%. In the US the problem is exacerbated by the fact that we haven't built a new refinery since the 1970s. Our existing refinery capacity is stretched to the breaking point. That's why they keep blowing up. A lot of them haven't had annual maintenance downtime in over 3 years. Think about that the next time you want to attack the evil oil companies for trying to build a disgusting refinery within 300 miles of your house. The supply bottleneck in the US was the refineries, even before Katrina. Nobody is price-gouging you, regardless of how good it feels to blame us.
Drilling and Production Technology: A typical offshore oil well costs $5 million to construct. It is not the simple gushing hole in the ground that Hollywood has fed you. It is a 20,000 foot deep, 9" diameter, steel-lined hole in 5-15 layers of rock. It contains at least $100,000 worth of hardware to control pressures exceeding 30,000 psi at temperatures above 300° F in a highly corrosive bath of chemicals. The materials used to survive this environment are range from highly chrom-alloyed stainless steel through to titanium. Most of it is made of nickel-based superalloys which are in very short supply.
As God's own joke, most of the oil AND most of the nickel come from parts of the world that are perpetually unstable, like Africa. (Of course everything Bush does makes this problem worse.)
Since all the tools required to construct a well are very expensive, they are all rentals. The drilling rig alone can cost around $100,000 PER DAY to rent. For large developments of multiple wells in the same area, an oil company will commision a dedicated platform to drill all the wells and babysit them during production. These are typically constructed on the model of a "party barge." You can see the two pontoons on the one in the Mobile Bay/Bridge wreck. Most are built in Korean shipyards and floated to their locations, where they are moored for the life of the project, typically a decade. For smaller projects, a drill rig is rented and when the well is complete, the rig leaves a small, unmanned platform behind to control the pipline or "tie back" to a larger production platform.
It is understood that at some point in their lives, these platforms will be smacked by a hurricane. Every well is provided with two safety valves. One will shut automatically within 15 seconds at the slap of a panic button. The other is a fail safe design that will slam shut under its own force if it is disconnected from the platform. Both of these valves are located below the ocean floor where even Katrina couldn't reach them. Every manned rig has a weather radar and satelite link to NOAA. Crews are evacuated 24 hours before a hurricane strikes. The first thing they do before they leave is "shut in" the wells, in hopes they can just throw the "on" switch when they get back.
"Peak Oil" 60% of the oil discovered on Earth is still in the ground. We are not running out of oil. It's just getting more expensive to extract it. The reason so much is still in the ground is because it costs too much to get it out. As the cost of extraction continues to mount, alternatives become economically feasible. This is what caused the dropoff in US oil production in the late '70s that is used as the algorythm to predict world production drop. Most models peg this date around 2010. This is not a cliff, it is a ROLLOFF. Oil will continue to be produced for your grandchildren's lifetimes. We just won't keep burning it in cars.
The Mississippi Canyon is the name geologists have for the Mississippi River delta as it spreads onto the floor of the Gulf of Mexico. Such ancient river deltas are a prime source of oil, and most of the oil produced in th GOM comes from the Mississippi Canyon. This was, of course, the direct path of Katrina. Most natural gas in the Gulf comes from the western half. So don't let any blowhard BS you about gas disruptions. It's the oil we will sorely miss.