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05-25-2006, 08:06 AM
Hurricane season could drive up gas prices: CIBC
CTV.ca News Staff
An active Atlantic hurricane season could drive gasoline prices up to $1.30 a litre this summer, CIBC World Markets predicted Wednesday.
Chief economist and chief strategist Jeff Rubin says another severe hurricane season in the Gulf of Mexico is likely to severely encumber oil production and drive crude prices to record highs.
"Echoing 2005, stormy weather is likely to mean further pain for motorists at the gas pumps during the coming driving season," Rubin said Wednesday in a release.
"The resulting drag on disposable income is expected to contribute to slower performance from the economy in the second half of the year."
At today's prices, crude oil costs account for about 60 per cent of the retail price of a gallon of gasoline, up from just 47 per cent two years ago.
Rising crude oil prices that are expected to rise by 10 per cent through the fall, decreased production capacity and lower-than-average supplies are also expected to send gas prices soaring.
Rubin forecasted that an active Atlantic hurricane season could mean the loss of as much as 750,000 barrels per day of production.
The CIBC World Markets report, entitled Drilling in Troubled Waters, forecasts that U.S. production will see a drop from about the current level of 7.3 million barrels per day to about six million barrels a day by 2010.
Last year, hurricanes battered the Gulf Coast, crippling the region's offshore oil industry, leading to huge production setbacks for new U.S. oilfields and construction delays for newly planned projects.
They also shut down existing production and much of the industry's service infrastructure along the Gulf Coast.
While U.S. dependency on foreign oil is expected to grow, the report says that Canada is alone among its current suppliers as a country in a position to significantly ramp up oil exports to the U.S. marketplace, mainly because of Canadian oilsands production.
CIBC World Markets is the wholesale banking arm of Canadian Imperial Bank of Commerce.
CTV.ca News Staff
An active Atlantic hurricane season could drive gasoline prices up to $1.30 a litre this summer, CIBC World Markets predicted Wednesday.
Chief economist and chief strategist Jeff Rubin says another severe hurricane season in the Gulf of Mexico is likely to severely encumber oil production and drive crude prices to record highs.
"Echoing 2005, stormy weather is likely to mean further pain for motorists at the gas pumps during the coming driving season," Rubin said Wednesday in a release.
"The resulting drag on disposable income is expected to contribute to slower performance from the economy in the second half of the year."
At today's prices, crude oil costs account for about 60 per cent of the retail price of a gallon of gasoline, up from just 47 per cent two years ago.
Rising crude oil prices that are expected to rise by 10 per cent through the fall, decreased production capacity and lower-than-average supplies are also expected to send gas prices soaring.
Rubin forecasted that an active Atlantic hurricane season could mean the loss of as much as 750,000 barrels per day of production.
The CIBC World Markets report, entitled Drilling in Troubled Waters, forecasts that U.S. production will see a drop from about the current level of 7.3 million barrels per day to about six million barrels a day by 2010.
Last year, hurricanes battered the Gulf Coast, crippling the region's offshore oil industry, leading to huge production setbacks for new U.S. oilfields and construction delays for newly planned projects.
They also shut down existing production and much of the industry's service infrastructure along the Gulf Coast.
While U.S. dependency on foreign oil is expected to grow, the report says that Canada is alone among its current suppliers as a country in a position to significantly ramp up oil exports to the U.S. marketplace, mainly because of Canadian oilsands production.
CIBC World Markets is the wholesale banking arm of Canadian Imperial Bank of Commerce.
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