| Analysis |
| Hurricanes
may send energy costs to new highs |
agencies
Energy
costs could hit new highs if hurricanes pound
production and refining centers again this summer
as supply and infrastructure problems make the
industry more vulnerable to disruptions, analysts
said.
Forecasts of another strong hurricane system
come as companies are still struggling to overcome
the effects of a chain of storms that rattled
oil and natural gas
infrastructure from the Caribbean to the U.S. Gulf Coast in 2005 and sent gasoline
prices soaring above $3 a gallon.
Another direct hit on key installations could
hit consumers' wallets even harder this year,
as oil prices hover within striking distance
of April's record $75.35
a barrel -- a peak hit on worries Iran's standoff with the West over its nuclear
ambitions could disrupt the OPEC nation's exports.
"We know what it means, we saw it during Rita and Katrina -- we're going
to have price spikes," said Adam Sieminski, energy economist for Deutsche
Bank. "We could see prices moving up pretty sharply."
Economists have been concerned that rising oil
costs could hurt global economic growth as
consumers cut discretionary spending and businesses
pay more for
their energy-intensive operations.
Analysts say the chances are small of two big
hurricanes tracing the paths of hurricanes
Katrina and Rita, shutting down offshore rigs
and a large swathe
of
refining capacity. But they warn supplies are starting the season on weaker
footing than last year.
"We have less supply and our demand is higher, therefore the situation in
the system is that much tighter than where were last year at this time," said
Mark Routt of Energy Security Analysis Inc., adding year-to-date supply of fuels
was 0.2 percent below 2005 levels.
INFRASTRUCTURE RISK
About 22 percent of U.S. Gulf of Mexico oil production
and 13 percent of natural gas output remains
shut-in due to hurricane damage last summer,
while
three
Gulf Coast refineries are only just beginning to come back from the storms.
"There is production that still hasn't come back and will never come back,
so in that sense we are starting at a deficit," said Katherine Spector,
head of Energy Research for JP Morgan Securities.
In addition, the oil industry is switching to
a new kind of anti-smog gasoline using ethanol
as an additive -- a product that can't be shipped
in pipelines
because it is easily contaminated by water condensation.
Fuel suppliers must use trains, trucks and barges
to get the ethanol to blending terminals, increasing
the amount of energy infrastructure vulnerable
to storms.
"Now if you have disruptions in railroad traffic that brings in ethanol
you can't make gasoline," Routt said.
Stronger demand and lagging refinery growth mean
the world's top oil consuming nation is also
more dependent on imports, which can take a
long time to
show up on U.S. shores to replace domestic supplies cut by storm damage.
And new ultra-low sulfur regulations for diesel,
which fuels the U.S. truck transport fleet,
mean there are fewer supply sources overseas
to
draw upon
in case of a
disruption.
Refiners along the Gulf Coast have stocked up
on generators and mobile homes for staff to
bring back damaged units more quickly this
year, but
analysts
say companies with offshore natural gas and oil rigs are likely to be
more wary.
"I think the industry will be pretty cautious and take their people off
rigs, so that could have a temporary negative effect on production," said
Spector.
 Back
to to
| Secretary
of defense |
| Rumsfeld
on defensive over Iraq |
agencies
Defense
Secretary Donald Rumsfeld faced tough questions
and hecklers during a stormy speech in Atlanta
on Thursday, with a former CIA analyst accusing
him of lying his way into the Iraq war.
Rumsfeld, an unyielding defender of the war,
denied lying. He told an audience at the Southern
Center for International Studies that the Bush
administration gave an "honest opinion" that
prewar Iraq had weapons of mass destruction.
"
I would like to ask you to be upfront with the
American people. Why did you lie to get us into
a war that was not necessary, that has caused
these kinds of casualties? Why?" asked audience
member Ray McGovern, who had a 27-year career
as a CIA analyst.
"
Well, first of all, I haven't lied," Rumsfeld
said.
One woman whose son was a U.S. soldier killed
in the war asked if the Pentagon was making
sure American troops were better equipped
for combat. "You
bet," Rumsfeld said. "And I'm so sorry
about your son."
There have been 2,411 U.S. military deaths
in the war, with 17,874 troops wounded in
combat, the Pentagon said on Thursday. Opinion
polls
show U.S. public support for the war declining.
President George W. Bush recently voiced
strong support for Rumsfeld after a handful
of retired
generals demanded his ouster, accusing him
of
strategic blunders in Iraq and ignoring military
advice.
Rumsfeld, whose speech focused on U.S. military
alliances worldwide, was interrupted briefly
by hecklers, including one clutching a sign
that read: "Guilty! of war crimes."
McGovern pressed Rumsfeld about the case
for war made by the administration before
the March
2003 invasion.
"
I'm not in the intelligence business," Rumsfeld
said about U.S. assertions that now-deposed President
Saddam Hussein possessed chemical and biological
weapons and was seeking nuclear arms.
Rumsfeld said then-Secretary of State Colin
Powell, in his February 2003 speech before
the United
Nations detailing U.S. beliefs about Iraqi
arms, had "spent weeks and weeks with the Central
Intelligence Agency people and prepared a presentation
that I know he believed was accurate."
Rumsfeld said Bush, who made the threat posed
by Iraq's weapons his main justification
for war, also "spent weeks and weeks with the
Central Intelligence people" before making
his case to the American people.
"
They gave the world their honest opinion," Rumsfeld
added. "It appears that there were no weapons
of mass destruction."
'I DID NOT'
McGovern shot back, "You said you knew where
they were," referring to the Iraqi weapons.
"
I did not," Rumsfeld retorted. "I said
I knew where suspect sites were."
"
You said you know where they were, near Tikrit,
near Baghdad, and north, east, south and west
of there. Those are your words," McGovern
shot back.
"
I'd just like an honest answer," McGovern
added. "We're talking about lies," also
mentioning the administration's assertions of
prewar ties between Iraq and al Qaeda.
A week and a half into the war, Rumsfeld
was asked on March 30, 2003, on ABC's "This
Week with George Stephanopoulos," whether
he found it curious that U.S. forces had not
yet found weapons of mass destruction.
"
Not at all," Rumsfeld responded, according
to a Pentagon transcript of the interview.
"
We know where they are. They're in the area around
Tikrit and Baghdad and east, west, south and
north somewhat," Rumsfeld stated.
Rumsfeld on January 20, 2003,
said Saddam's government had "large, unaccounted for stockpiles of
chemical and biological weapons, including VX,
sarin, mustard gas, anthrax, botulism, and possibly
smallpox," as well as "an active program
to acquire and develop nuclear weapons."
Other audience members in Atlanta
were gentler. One asked about "what happened in your childhood
to make you the man you are today? This might
help some parents, because you're a great man." Rumsfeld
noted that "my mom was a school teacher
and my dad read history voraciously."
Back
to to |
