Hurricane Ida made its way onto land this past Sunday in Prot Fourchon, Louisiana, deemed a Category 4 hurricane. This particular city produces around 18% of the oil supply here in the United States. According to a recent Fox Business market analyst report, Hurricane Ida could end up hiking gas prices.
Beyond its role in producing oil for the United States, the city also plays a role in more than 90% of the deepwater oil production in the Gulf of Mexico, supporting over 250 different companies.
In the next few weeks, this devastating hurricane will impact the oil market in a potentially terrifying way. Phil Flynn, a representative of the Price Futures Group, noted that the storm would hit more than a dozen oil refineries, which together hold over 2 million oil barrels.
In a recent report, Flynn said, “I expect the track of the storm could add anywhere from $.05 – $.10 a gallon.” He also noted that power outages, flooding, and electrical downtime would likely add to the overall cost of gasoline.
“We also have to be a little bit concerned about oil platforms,” Flynn added. “Even as they are hunkered down, the type of storm could do some longer-term damage to oil rigs and platforms.”
Another problem that Flynn highlighted was for export hubs in Louisiana, such as New Orleans. New Orleans is at the entrance of the Mississippi River, a river that acts as a trading route for more than 500 million tons of goods every year.
This hurricane wouldn’t be the first that had a significant negative impact on gas prices, as Hurricane Harvey forced eight oil refineries to close when it hit Texas back in 2017. On average, the hurricane increased gas prices by around $.10 per gallon. During a winter storm back in the early half of 2021, gas prices were up around $0.6.
GasBuddy app representative Patrick De Haan warned Louisiana residents that rushing out to fill up their tanks before the storm could have even worse impacts on the gas shortage, resulting in larger price bumps in the long run.
“Louisiana gasoline demands up sharply yesterday, over a 25% gain versus the average of the last four Thursdays,” De Haan tweeted last week.
“Instead,” De Haan said, “motorists should prepare by reducing their gasoline demand as much as possible and use the fuel for evacuations as necessary.”
According to AAA, as of Monday, a gallon of gas price stood at $3.15, which was only a single penny up from the average on the previous day and down a cent from the week prior. However, wholesale gasoline was around 5 cents more than it was last week on Monday.
The Biden Administration is now concerned about inflation, so they are pushing OPEC to agree to an increase in oil production. Many expected OPEC to agree to 400,000 barrels each day to the rise. However, the Kuwait oil minister questioned whether the commitment to an increase was necessary considering the surging COVID-19 cases, which could cut into oil consumption.
Hurricane Ida brings ‘nightmare scenario’ for gas prices …. https://www.foxbusiness.com/markets/hurricane-ida-nightmare-gas-prices
Consumers shouldn’t rush to fill their gas tanks ahead of …. https://www.foxbusiness.com/lifestyle/fuel-demand-louisiana-hurricane-ida