Shell Oil Company and Katrina

Essay by drtexas00University, Bachelor's May 2006

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The true immediate costs for Shell Oil Company are untabulated. The company lost 60% of its production in the Gulf in the following weeks after hurricane Katrina. The Shell Company suffered intangible losses of employee moral and high turnover. Its tangible losses are not limited to losses in refining capacity, downed transporting pipelines, and downstream revenue from retail stores sales.

However despite these immediate losses Shell occurred, it remains the Worlds second most profitable oil and chemical manufacturing business, behind ExxonMobil. Its long term out look remains very strong. In fact, the Katrina disaster may turn out to be a catalyst for future company growth. Some of this growth most likely never would have been attained without the price shock following Katrina. Recently 3rd quarter profits for all the Worlds major oil suppliers were up, way up. Shell is no exception. Their quarterly earning have risen 68% to almost 9 billon dollars.

These profit earnings have almost set a new world record in the history of profit making.

May reasons attest to the extremely unyielding 3rd quarter profits. The number one reason being such that the price of oil toped over $70 a barrel after the Katrina damage reports caused gas runs. These national gas runs were created from fear of limited supplies and inflating prices on the retail gas prices per gallon level. Although production dropped significantly in their southern region operations, Shell was able to make more profit per gallon nationally over the total cost of losses sustained from the Katrina incident. In fact, Shells U.S. production was only marginally affected with at most 20% total loss in U.S. production for only a few days after Katrina. The production nationally leveled off to being around 90% of the capacity of what it was pre-Katrina levels.

Refinery production...