Reports about Hurricane Katrina make for grim reading. Not just the immediate human and physical toll, which is the worst of all. Also worrying must be the financial impact, both in terms of the likely huge insurance payouts and the rising price of oil – although high oil prices may eventually trigger a supply response, if the market works as it should.
More than 90 percent of the Gulf of Mexico oil production has been shut down and for how long, is as yet unclear. Crude oil is now over $70 a barrel and could even march higher, particularly if another hurricane takes hold, or if political and military affairs take another bad turn in the Middle East, or for that matter other places such as Nigeria and Indonesia. The black stuff is getting ever more expensive and of course, makes a mockery of the sort of anti-SUV posturing of the sort I mentioned a few days ago here. As the price rises, people will not change their motoring habits to please non-drivers like Andrew Sullivan, but because it makes plain common sense. Alternative energy sources, even those once branded too offbeat, starting to attract more venture capital and support.
Britain’s Channel 4 news had an item on the hurricane in which the general gist of the commentary went like this, to paraphrase a bit: “Is America getting the payback in weather for being the world’s largest carbon polluter?” The broadcasters may mean well but it came across as almost gloating in tone. I hope that was not the intention.