Why Gulf of Mexico Hurricanes Like Gustav Raise the Price of Oil

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As Hurricane Gustav picks up steam before it enters the Gulf of Mexico and continues on its projected path towards Louisiana, you may have noticed media reports of another spike in the price of oil.

Hardly unexpected, this is nothing more than speculation by investors who are “betting” that Hurricane Gustav (currently classified as a tropical storm) will halt the exploration and production of oil as it rips through the Gulf of Mexico’s oil rich continental shelf.

The more chaos the hurricane is expected to cause oil exploration and production operations, the higher the price of oil is speculated upward. In other words, the bigger the hurricane, the more oil goes up!

There are literally hundred of oil rigs and platforms scattered throughout the Gulf of Mexico that will each be affected in their own ways.

I am writing this article today to share how Hurricane Gustav is affecting the oil rig that I work on to help shed some light on this often underreported aspect of a hurricane’s effect. That’s right, at this very moment I am on an oil rig about 150 miles south of Louisiana in the middle of the Gulf of Mexico directly in line with the storms projected path.

The most recent forecasts from the National Hurricane Center have the projected eye of Gustav literally passing over our current location in 3 days. The good news is this gives us 3 days to sail to a safer location and out of harms way.

Before news of Hurricane Gustav we were drilling a deepwater oil well in approximately 6000ft of water for a major oil company. As per our company’s policy, when it became apparent that a major hurricane could be threatening the Gulf of Mexico we shut down our operation and began preparing for the storm causing us to loose at least 4 days of productive drilling time.

Many oil exploration and production rigs are either anchored to the seabed, or are fixed to the seabed via platform legs. On these units, the oil spigots are usually turned off and the crew members are evacuated to dry land until the storm passes in many cases up to a weak later.

My current rig has the luxury of being able to sail out of harms way as it is self propelled capable of making 6 or 7 mph in ideal situations. It’s not fast, but it’s usually enough to get clear of a hurricanes most dangerous wind bands.

The first priority for the oil exploration and production industry is to ensure the safety of its personnel in the field. We take no chances in ensuring that these people are taken to safety regardless if the oil flows or not. This is why even the mention of a hurricane entering the Gulf drives the price of oil up by speculators.

These speculators know that even if the storm dissipates, most drilling and production operations will have already shut down so that they will have time to protect the men and women that are working on the front lines.

Be sure to check back over the next few days for more updates on the storm and our progress, and please wish my crew and I luck!

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