[R-G] [BillTottenWeblog] Coup de Grace

[Bill Totten]

Clusterfuck Nation

by Jim Kunstler

Comment on current events by the author of
The Long Emergency (Atlantic Monthly Press, 2005)

www.kunstler.com (September 01 2008)


As I write at 6:30 Eastern Daylight Time, Hurricane Gustave grinds out
of the Gulf of Mexico to make landfall on the Louisiana Coast at Port
Fourchon, the marshalling yard for the oil and gas industry - where the
oil companies move people and equipment to the rig zone offshore. The
storm spent the wee hours of the morning chewing through a wad of
offshore drilling platforms and, perhaps more importantly, the Louisiana
Offshore Oil Port (or LOOP), where all the oil supertanker ships from
Middle East come to offload their cargos. It will probably be days
before we know what was chewed up out there - not to mention the
spaghetti-like network of pipelines that run all over the shallow bottom
to carry the oil and gas from the platforms to the refineries just up
the Mississippi corridor between New Orleans and Baton Rouge.

So, at this hour nobody knows yet what the outcome will be, either for
the city of New Orleans and its suburbs, or for the oil and gas
industry. My guess is that enough oil and gas will come off-line, be
shut-in, or get disrupted to severely affect the normal operations of
America for a couple of weeks. At the least, our just-in-time gasoline
and diesel supply system will take a forced time-out. Those refineries
on-shore are in the path to get hit. If they are damaged then we'll
probably see shortages of motor fuels all over the eastern US.

If we see a shortage of motor fuels, we may also get a disruption of
trucking for the just-in-time food delivery system that keeps the
supermarkets stocked. So, there is a possibility that Americans will
experience both fuel and food shortages this back-to-school week - and
in some places it may be the not-back-to-school week if there is any
trouble getting fuel for the yellow bus fleets. There has also been
chatter about possible far-reaching damage to the old-and-fragile
electric grid if this storm trips just the right switches, but that's in
the category of idle talk for now.

All the above is unknown so far, and I won't even venture to guess what
may happen in the city of New Orleans itself - except that the morale of
its citizens must be badly strained as three years of re-building gets
undone and the long-term future becomes an even more dubious proposition.

Projected damage estimates on CNN early this morning ran into about the
$30-billion range. This hit, and the potential disruptions to the
everyday economy, could be the shot that finally pushes the
long-teetering banking system over the edge. Surely the insurance
industry, which is tied to banking and its worthless alphabet
securities, will not be in position to cover all its billions of dollars
in payouts. This may be what finally stops the game of musical chairs in
which insolvent banks pretend to be capitalized by showing up for loans
at the Federal Reserve's teller cages. For instance, when last seen
before the Labor Day hiatus, Lehman Brothers was desperately scrambling
for life-support from anybody and anything with a few billion spare
bucks. As the hiatus ends and real-life reasserts itself, Lehman may
finally find itself free-falling into the abyss, and the chain of mutual
obligations, cross-collateralizations, and Ponzi plays connecting it to
the other banks could break, bringing on a domino fall of insolvent
banks and institutions.

All the hurricane action has come at a bad time for the Republican
Party. The roll-out of John McCain's ridiculous and cynical choice of a
running mate, complete with pompom pumping cheerleaders, will remain
front and center in the public's consciousness now while the party
delegates go through a few procedural motions in Minneapolis - taking it
light on the funny hats, and the other usual festive hijinks, which
would only seem indecent against the background of a profound natural
disaster. Despite the poll numbers currently showing a fairly close race
between Obama and McCain, the Republicans are well on-track to being
regarded as "the party that wrecked America". So it's fitting that their
quadrennial meeting should be solemn and restrained.

This official last day of summer, Labor Day Monday, with roughly twenty
percent of America's oil production getting chewed up, and the financial
markets shut down, and the public in other places than the Gulf states
kicking back with weenies and burgers, or watching the hurricane on TV,
may be the last day of seeming normality in this country for quite a
while to come.

I will come back to this week's blog later this afternoon or evening
when more is known about the outcome of Hurricane Gustave.


Update, 7:30 pm Eastern Daylight Time, September 1:

Hurricane Gustave has now moved away from New Orleans and is stumbling
northwest through the backwaters of Louisiana toward Texas. Damage to
the city of NOLA seems to be minimal at this time. But there is
something very strange about coverage coming across on the cable news
networks. While trumpeting the "dodged bullet" story-line, and the
triumph of post-Katrina government bureaucracy, there have been
absolutely no reports of what's happened to the oil-and-gas platforms
offshore, the Louisiana Offshore Oil Port (LOOP), or the tangle of
pipelines running along the sea floor from these things to the onshore
terminals and refineries. I'm quite sure we will not get any
comprehensive news about these things for days, because it will require
a huge effort of up-close inspection. Gustave roared over that area as a
category three storm. It is possible that a great deal of damage has
been sustained and that we may still look forward to trouble with
gasoline, diesel, and methane gas supplies in the weeks ahead. Playerz
on the oil-and-gas futures markets must have been watching CNN and MSNBC
all day - and have no idea whether we actually have a problem out in the
rig zone.

____________________________________

My new novel of the post-oil future, World Made By Hand, is available at
all booksellers.

http://jameshowardkunstler.typepad.com/clusterfuck_nation/2008/09/as-i-write-at-630-eastern-daylight-time-hurricane--gustave-grinds-out-of-the-gulf-of-mexico-to-make-landfall-on-the--lo.html


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