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Gustav's potential impact on the oil and gas industry
The price of U.S. crude oil has jumped about 2%, and the price of U.S. natural gas has increased 11% in the past two days, in anticipation that Gustav might rip through the oil and gas production areas of the Gulf of Mexico. About 25% of U.S. crude oil and 15% of its natural gas are produced in the Gulf of Mexico. As seen in Figure 2, the oil production areas are concentrated along the Louisiana and Texas coast. If Gustav makes a landfall on the right side of its cone of uncertainty, in Alabama or the Florida Panhandle, the oil and gas infrastructure might not be significantly affected. However, most of the cone of uncertainty lies in the major oil and gas producing areas, and I give an increased 70% chance that Gustav will significantly hurt oil and gas production in the Gulf.


Figure 2. Location of major oil platforms in the Gulf of Mexico. The data was taken from the Department of Interior Mineral Management Services
 
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