Wampum

"Hurricane Ivan's true legacy will be $50 oil,'' said John Kilduff, senior vice president of energy risk management at Fimat USA Inc. in New York.

Today, that seldom discussed agency of the Federal government, the EIA (Energy Information Agency) released its update of current US fuel reserves. The news was not good: Crude oil supplies dropped 9.1million barrels, significantly above the 7million barrels analysts expected.

In addition, things look very bad for refined petroleum products:

Heating oil prices reached $1.346, the highest since the contract was introduced in 1978. Heating oil for October delivery was up 2.71 cents, or 2.1 percent, at $1.33 a gallon in New York. Prices were 89 percent higher than a year earlier.

Gasoline for October delivery was up 4.14 cents, or 3.2 percent, at $1.331 a gallon in New York. Prices were 66 percent higher than a year earlier.

Ironically, the remnants of Ivan have ended up back in the Gulf of Mexico, although it is not yet clear whether they will redevelop any tropical storm characteristics. The stormy weather will hamper repair efforts, however, on a number of oil rigs with sustained damage, delaying a return to full production capacity. Three other tropical systems are haunting the Atlantic basin, with a fourth showing development potential. While none are threatening land at the moment, shipping interests are considerably inconvenienced by the climatic chaos abound.

So should the Administration be concerned these shortfalls will effect consumer sentiment? WSI, which charts the impact of weather on business, reports:

Andover, MA, September 21, 2004 � WSI Corporation today issued the seasonal outlook for the upcoming three-month period (October-December). WSI expects this period to average cooler-than-normal in most of the northern half of the US, with the exception of the Pacific Northwest, as well as the southern Plains and western Gulf Coast states. Warmer-than-normal temperatures will be confined to the the Pacific Coast states, the Southwest, and the Southeast. The WSI seasonal outlooks reference a standard 30-year normal (1971-2000).

Here in southern Maine, we don't tend to turn on the furnace much until mid-October, and then can generally run off of last springs oil reserves in the tanks until sometime in November. However, if the weather should in fact turn cold, as it has been recently, we might have to move up that date. I imagine we're not alone, and I've heard that many people who traditionally are on year round heating fuel schedules stepped back from them this summer, banking on the high prices dropping this fall. Looks like they gambled wrong.

The real question is what effect will high prices have on voters in recession-weary, heating-oil dependent swing states such as Ohio, Pennsylvania, Wisconsin, New Hampshire and Maine? My guess is it's still too soon to answer.

Hurricane season doesn't end until November 30th.