Sunday was the first day of hurricane season for 2008 and the first named storm showed up right on schedule as though to prove that point. Arthur formed on Friday just east of Belize and quickly made landfall over the Yucatan Peninsula. By Sunday night Arthur had faded into a tropical depression and no longer any threat to the Gulf.
Arthur did force the closing for two of the three major Mexican oil ports. Officials there said they would be quickly reopened as soon as the storm passes and they did not see any reason for delayed shipments. There are no other storms on the horizon today according to the National Weather Service.
Hurricane forecasters are expecting a more active season than normal with 8-9 hurricanes. This is the same forecast for the last two years and there were no storms of consequence either year. The law of averages should be working against us after two years of relative quiet. According to the NWS the historical average for named storms is 11, with six hurricanes of which two will be major hurricanes.
The list of names for 2008 are Arthur, Bertha, Cristobal, Dolly, Edouard, Fay, Gustav, Hanna, Ike, Josephine, Kyle, Laura, Marco, Nana, Omar, Paloma, Rene, Sally, Teddy, Vicky and Wilfred. There are betting pools on which storms will make landfall and which will reach Cat 5 status.
Arthur had already faded before crude futures opened for trading Sunday night so there was no spike on the news. As I write this at 1:AM Monday the price of crude has dropped to $127 per barrel. The price of gasoline reached $3.97 over the weekend and could easily hit $4 next week. 78% of Americans expect gasoline to reach $5 in 2009 according to a CNN poll.
A London think tank, Global Insight, said there are 887 million vehicles in the world. That is up from 553 million just 15 years ago. It is estimated that the number will top one billion before 2012. Of that 113 million increase only about 10 million will be hybrids. Over 100 million new vehicles will still be normal gasoline/diesel versions. Even if they were all the economical versions and got 25 mpg the amount of new oil needed is astounding. Assuming each vehicle drove only 100 miles per week, less than half the U.S. average, and got 25 mpg it would require an additional 15 million barrels of oil per day in 2012.
That is an impossible number. Current global production is just over 85 mbpd with another 2-3 mbpd gained from the refinery process and from natural gas liquids. We lose just over 4 mbpd per year for depletion and demand has been increasing about 1.5 mbpd per year. In order to add 15 mbpd of production by 2012 we would need to find and produce nearly 30 mbpd of new oil just to offset depletion and this new demand. There is absolutely no way on earth for this to happen. Saudi Arabia spent $20 billion over the last 5 years to increase production by 1.5 mbpd. They are the only country with any material oil left untapped and they said last month they would NOT produce it in order to leave it for future generations. Trouble is coming our way fast and nobody in authority really has a clue.