The International Energy Agency has warned of a global energy crisis sparked by the damage Hurricane Katrina has inflicted on strategically important oil refineries. The warning from IEA executive director Claude Mandil came despite crude prices easing over the weekend as industrialised nations tried to head off an oil shock by tapping their emergency stockpiles to help meet US demand for fuel. But despite the pledge from the IEA's 26 oil-consuming member nations to release 60 million barrels of fuel over the next 30 days, Mr Mandil said the damage inflicted on the Gulf of Mexico's refineries had very serious global implications.
With a significant proportion of the US's oil refining capacity impacted, Mr Mandil said the world's biggest consumer of fuel would likely have to look offshore to meet its requirements – and prices would rise as a result. "They (the US) are already buying gasoline in Europe," Mr Mandil told German newspaper Die Welt. "If the refineries are damaged that will only increase, then this will become a worldwide crisis very quickly.
"If the crisis affects oil products then it's a worldwide crisis, no one should think this will be limited to the United States." Mr Mandil said consumers across the world should actively be saving fuel so as to limit the fallout from the hurricane, which would be most seriously felt in poor nations.
Crude oil prices rose to a record $70.85 a barrel last week, but fell back to prices around $US67 over the weekend after the IEA's member nations unanimously agreed to tap their emergency supplies. It is only the second time the IEA has opened its reserves since its establishment in response to the Arab oil embargo 31 years ago, the other time being during the first Gulf War.
Oil traders also took note of news that tankers had started offloading at the massive Louisiana Offshore Oil Platform for the first time in more than a week and an announcement that hurricane damage to the US oil pipeline system had been minimal. But the storm-ravaged Gulf of Mexico receives more than half of the US's oil imports and is home to about 50 per cent of the nation's refining capacity.
Alaron Trading's senior energy analyst Phil Flynn said tapping the emergency reserves would probably not make up for the destruction caused by the hurricane, with 90 per cent of daily crude output from the Gulf of Mexico still offline on the weekend. He said the huge damage inflicted on oil refineries in the Gulf of Mexico would not be fixed for weeks or even months.
"The Government is trying to relieve this crisis but there is little they can do," Mr Flynn said. "I don't think that crude oil production will be close to pre-storm levels until December." And the impact of Hurricane Katrina is also expected to reach far wider than energy prices and the estimated $US100 billion $A130 billion) damage bill, with Wall Street's biggest bond dealers having reduced their forecasts for third-quarter economic growth.
White House National Economic Council director Allan Hubbard warned economic growth would slow by as much as half a percentage point in the third quarter because of the hurricane. But Goldman Sachs said while the US economy would slow for the rest of the year, a post-hurricane construction boom would then fuel growth early in the new year.
"Growth rates for the first two or three quarters could be boosted by 1 percentage point or more, resulting in more than a full offset to the level of output by the middle of next year," the company says in a note to investors. Foreign Affairs Minister Alexander Downer said yesterday he expected Australian consumer spending would be softer because of the hurricane-related oil price spike – an impact that would also be felt across the world, Brisbane Courier Mail reported.