Hurricane Ida’s Impact on U.S. Energy Industry & Fuel Prices
CNN Business reported more than 95% of the Gulf of Mexico’s oil production facilities have been shut down as of Sunday due to Hurricane Ida, indicating the massive storm is having a significant impact on energy supply.
CNN Business noted:
Six refineries in the New Orleans area — including PBF, Phillips, Shell, Marathon and two Valero refineries — are shut down right now, Andy Lipow, president of Lipow Oil Associates, a Houston-based consulting firm, told CNN Business. “It’s now a waiting game to assess whatever wind and flooding damage will be caused as the hurricane passes through the area.”
The location of Hurricane Ida’s landfall is “one of the worst possible for the oil industry” and it could impact the major pipelines that carry fuel from the Gulf Coast to the East Coast markets, Lipow said. The shuttered six refineries “account for about 1.7 million barrels per day of refinery capacity, representing 9% of the nations total,” he added.
The other three refineries in the area — Exxon, Placid and Kratz Springs — are in the Baton Rouge area. “They appear to be operating at reduced levels,” Lipow said, adding that those three refineries account for about 700,000 barrels per day, roughly 3.5% of US daily consumption.
The Colonial Pipeline also has temporarily halted fuel deliveries from Houston to Greensboro, NC, due to Ida. The pipeline, which was the subject of an unprecedented cyber attack earlier this year that led to fuel supply problems and prices to spike, is the largest petroleum products pipeline in the U.S. Colonial expects to resume full service once the company assesses the impact of Hurricane Ida on the system’s operations.
While the impact on gas prices has yet to be seen, Patrick De Haan, Head of Petroleum Analysis at GasBuddy, said Sunday that while gas prices will not skyrocket, there is a 75% chance there will be a 5-cent increase in gas prices and a 60% chance prices increase by 10 cents. A spokesman for AAA said a surge as high as 20 cents per gallon is not out of the question, as nine refineries were in Ida’s forecast track.