UNRAVELING THE ENERGY SECTOR

摘要

Before the market faced the aftermath of Hurricane Katrina. energies already were coping with unusual circumstances. Record prices, the largest global oil consumption ever — U.S. demand alone reached 21.3 million barrels a day on average for June — crude oil inventories 5% above the five-year average and an economy that still managed to fare well with GDP above trend and low inflation. Confusing? Depends on how you look at it. Some say price increases have been gradual compared to past oil jumps. In 1979, oil prices doubled in six months, leading to recession and rising inflation. In this go around it took approximately 18 months. China is the simple answer to record worldwide demand. And why wouldn't inventories increase upon anticipation of abnormally high consumption? Then there are low interest rates and rising home values. Money has been cheap so pre-Katrina consumers tolerated prices at the pump, right? While some analysts are able to unscramble the variables, others still have questions. And there is no denying that predicting where we go next is not an easy task, especially with Katrina adding a huge dose of uncertainty to an already confusing picture. After all, 28.5% of the United States offshore crude oil production and 19.2% of offshore marketed natural gas production comes from the Gulf of Mexico.