ARA's Hurricane Katrina update

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The Agricultural Retailers Association is reporting that according to the American Petroleum Institute (API), as of last Thursday, 24 percent of U.S. daily oil production was shut down, 13 percent of U.S. daily natural gas production was shut down, refining capacity is 20 percent below normal, and several key pipelines are operating but at reduced rates. While inventories for heating oil, propane and natural gas are above average for this time of year, costs are substantially more than in 2004.

The U.S. Energy Information Administration's (EIA) 2005 Short Term Energy Outlook report issued September 7 indicates that the current outlook for the upcoming winter (October 2005 through March 2006) yields expectations for energy expenditures as follows: petroleum: +34 percent; natural gas: +52 percent; coal: +16 percent . Electricity expenditures for the winter are expected to be up 11 percent.

This translates into high fuel and fertilizer costs for the agricultural industry for the remainder of 2005 and the first half of 2006.

To view a copy of the EIA report, go to www.eia.doe.gov

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