Heating oil prices set for rise as production shuts down

1 September 2008

Further increases to heating oil prices could be on the way as oil production in the Gulf of Mexico has been shut down.

According to the New York Times, around 96 per cent of production in the area was stopped over the weekend as companies prepare for the arrival of Hurricane Gustav.

Crude oil prices rose slightly as a result, with further gains expected if a significant number of the 3,000 oil and gas platforms are affected.

Improvements to facilities mean disruption is not expected to be as extensive as that of three years ago when Hurricanes Katrina and Rita hit the area, with Rice University oil expert Amy Myers Jaffe saying: "The production bounce-back time is going to be much faster than last time."

However, the publication states that even minimal damage may take a week to recover from, as assessments would have to be carried out after the storm before workers could return.

In July Hurricane Dolly shut down production of at least one refinery, leading to a rise in home heating oil prices.

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