With Hurricane Gustav ripping it up in the Caribbean and projected to take aim at either Louisiana or the northwest Texas coast, market analysts are predicting at least a dime to quarter rise in gasoline prices as the storm is forcing evacuations and shut-in of platforms across a large swath of the Gulf. This happens every time a storm starts rattling around in this region. Why? Because the Gulf accounts for more than a quarter of US production and a solid majority of US refining capacity.

One of the tenents of a solid risk management strategy is diversification. In this case, a very reasonable diversification strategy would be extending our production outside of the Gulf and maybe even think about locating some additional refining capacity on either coast, helping to reduce price shocks everytime a storm blows up.

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