Maybe it's time to buy a Vespa after all...and knit afghans

The Oil Drum has the straight poop on Katrina's impact on Gulf of Mexico oil production. And it ain't pretty.

Marketwatch reports:

Heating-oil futures for September delivery already tapped a record $1.975 a gallon on the New York Mercantile Exchange as crude reached $70.80 a barrel overnight, September natural gas climbed to an all-time high of $12.07 per million British thermal units overnight. See Futures Movers.

Deliveries of natural gas for August have already been halted for an indeterminate amount of time under a force majeure declaration by the New York Mercantile Exchange Monday.

So far, Katrina has had twice as much of an impact on crude oil as last September's Hurricane Ivan, and it has caused natural-gas prices to gain 40% more than they did with Ivan, Williams said.

"Hurricane Katrina may be one of the worst on record both for the mainland and the oil and gas industry," he said, while adding it "will be several days before the extent of the damage is known."

U.S. natural gas storage is currently at a surplus relative to the five-year average of nearly 200 billion cubic feet, Ameko said.

But with significant facilities closures, that surplus may erode completely ahead of the beginning of winter.

Katrina is "on track" to create a deficit of around 94 billion cubic feet heading into the winter season, he said, adding that Katrina will not only impact the production off shore, but on shore as well.

So if you think you're OK because you have gas heat, forget it.

Business Week has more:

Natural gas futures briefly surged more than 20 percent after the temporary closure of a critical distribution hub and on concerns that power outages and flooding could prevent processors from running their plants for days, if not weeks. Even before Katrina arrived, the Energy Department had warned consumers who rely on natural gas to heat their homes to expect sharply higher bills this winter.

So in short, if you have to heat your home, you're fucked.

There's no way that the additional cash people have to shell out this winter to heat their homes and get to work isn't going to have a ripple effect throughout the economy. Food prices will go up because everything has to be transported. Building materials will go up because they use petroleum. And with worker pay rising at an all-time low, something's got to give. Either Americans will spend less or go into even more debt.

Recession 2006, here we come. I wonder what Bush's answer is going to be. No I don't; it'll be his same answer to everything: More tax cuts for his friends.