Germany's economy minister has said he fears hurricane Katrina, which has devastated the southern US coast, could lead to a further rise in oil prices and dampen already weak domestic spending in Germany.
Oil platforms have been shut down, raising concerns about supply
Minister Wolfgang Clement said a further rise in oil prices could have fatal consequences for German consumer spending, since a liter (0.26 gallons) of high-octane gasoline in Germany already costs more than 1.30 euros ($1.60), a record.
"The situation on the oil market is very serious," he said in Berlin on Wednesday. The record oil price, now at over $70 per barrel, is "a real catastrophe for people," he added.
The president of the German Chambers of Industry and Commerce, Georg Ludwig Braun, said the high oil prices are definitely a damper on Germany's domestic economy, since high prices for heating oil and other petroleum products would take money out of consumers' wallets that they would normally spend for other purchases.
Weak consumer spending is often blamed by economists for the continuing weak performance of the German economy. While exports continue to be robust, the spendthrift ways of German consumers have prevented the economy from taking flight.
Oil prices have jumped due to fears by traders that oil supplies could be squeezed in the wake of hurricane Katrina, which caused several oil platforms in the Gulf of Mexico to close. Eight refineries in the US south were shut down and the production capacity of two others has been curtailed, meaning a loss of more than ten percent of US refinery capacity.
The Cheveron Pascagoula Refinery is shown flooded out by the storm surge caused by Hurricane Katrina in a Pascagoula, Miss.
Energy analysts warn it could be weeks before the real consequences of the storm can be assessed.
OPEC said Wednesday it would do its utmost to ensure the stability of the global oil market in the wake of the hurricane and would discuss the means at its summit in Vienna on September 19-20.
Rescuers scrambled buses, boats and helicopters Wednesday to evacuate survivors of the catastrophe.
New Orleans Mayor Ray Nagin said close to a million people had been evacuated from the city and surrounding areas before and after Katrina pounded the Gulf Coast on Monday, leaving hundreds feared dead.
This aerial photo shows the devastation caused by the high winds and heavy flooding in the greater New Orleans area following Hurricane Katrina
But he said "a couple hundred thousand" were still trapped with the lake spilling into the low-lying city after an effort to plug a breach in a major levee failed Tuesday and pumps gave out.
Nagin told ABC the flooding was not the only concern as he was also worried about bodies in the water. "At some point in time, the dead bodies are going to start to create a serious disease issue."
The once-bustling southern jazz mecca offered an almost surreal watery landscape Wednesday, with the eerie silence punctured only by the whirr of helicopters above and the occasional hum of a electric generator.
People scrounging for food and cigarettes streets roamed ever-diminishing areas of dry land, including the famed French Quarter. Shops were smashed by looters; some were gutted by flames.
New Orleans residents walk through floodwaters that besiege the Crescent City on Tuesday, Aug. 30, 2005.
Nagin said the waters flooding into the low-lying city "will rise to try and equal the water level of the lake, which is three feet (one meter) above sea level.
"That's significant, because on St. Charles Avenue, one of our most famous avenues, it is six feet below sea level in elevation. There will be nine feet in that area, and probably 20 feet in other areas of the city," he said.
Nagin said it would be 12 to 16 weeks before residents could return to the city, an assessment echoed by Blanco. "We don't know the integrity of the buildings," she said. "But it is going to be weeks, perhaps months." "It is a logistical nightmare for us to just bring water and food supplies in. The stores can't function, you know. It is a miserable situation," the governor said.