Oil prices climbed, dropped and climbed again as the markets took in the news that BP is being forced to halt production at the single largest oil field in the U.S. BP began closing down production at the Prudhoe Bay oilfield on Sunday after discovering severe corrosion in the pipelines. The field accounts for 400,000 bpd or 8% of the 20 million barrels of oil used by the U.S. daily. Repairs are expected to take several months, and a return to full production is not expect until February next year (if it is even possible).

As the news broke on Monday, crude prices hit an new all time record of 78.64 usd. but fell slightly as officials assured the panicing market that the U.S. government's stategic oil inventories would be released to help cover the lost production and that oil could be diverted from Saudi Arabia and Mexico.

However, the market this morning is apparently not so certain and prices started rising again. Any other bad news relating to global oil supply will no doubt push prices over the 80 dollars mark and beyond. There is doubt on whether either Mexico or Saudi Arabia can make up the lost production. Mexico has recently seen it's largest field start to decline at rate much faster than expected and Saudi has been failing to deliver extra production for ages despite repeated assurances that it would.

Accelerating global demand, especially from Russia, China and India have fuelled growing concern over oil suppies. Militant protesters have been disrupting production in Nigeria and the U.S. struting around with threats to Iran have obvious long term inplications for oil supply.

To cap it all, the US Gulf hurricane season has a couple of months left to run and production from the gulf of mexico has yet to recover from last years pounding. Another direct strike by the forces of Gaia would no doubt push oil prices over 100 dollar a barrel now that a large chunk of Alaskan oil is off the menu.

It's no doubt that this week see's the U.S. oil suppies at their most vunerable and with the U.S. never more hated than it is now, the coming months represent a prime opportunity for a strategic terrorist attack. Just one incident on a significant oil refinary, tanker or pipeline would send a devastating economic shockwave across the U.S. and perhaps around the world.

Then again, it's also entirely possible that war will spread from the Lebanon and engulf the entire middle east, thanks to Israel's execution of U.S. and UK foreign policy. In which case, Armageddon may erase all such petty concerns.

--  gringoben@gmail.com

note: The climate camp taking place near the Drax power station near Leeds later this month will include many workshops on the issues of energy, peak oil and climate change.