New York (CNN Business) A hurricane could directly hit the country’s oil and gas industry, raising gas prices, exacerbating inflation affecting American consumers.
But it depends on how much the price goes up and how often it depends on the damage. The hurricane struck Louisiana and the Gulf Coast on Sunday, killing at least one person and injuring more than 1 million customers.
The price of a gallon of regular gas dropped to $ 3.15 on Monday, according to AAA, averaging just one cent from the previous day and 1 cent a week ago. But wholesale gasoline futures rose 5 cents earlier on Monday. They traded up to 10 cents per gallon on Sunday night, indicating that retail prices may follow soon.
Due to the epidemic, driving and economic activity have come to a standstill, with gas prices rising by almost 80% in April 2020. But since then, Americans have been hitting the road with increasing demand for gas. Prices have increased by 41% since last August.
Production of the Gulf Coast will be closed
More than 95% of U.S. oil production at Gulf Stations and Gates in the Gulf of Mexico was shut down before Hurricane Ida, according to the Federal Office for Safety and Environmental Protection, which oversees those facilities. Tom Kloza, head of global energy analysis for the Oil Price Information Service, which monitors prices for AAA, said they would wait until the next announcement.
Most of the major filters in the region are closed or operating at reduced rates, and there is no word yet on whether Cloza will return to normal.
Louisiana is home to three of the country’s seven largest refineries and accounts for 17.5 percent of the country’s total refining capacity, according to the US Energy Information Administration.
Another concern is that major pipelines carrying gas, diesel and jet fuel from the Gulf to other states have been closed as a precautionary measure before the storm. The closure of one of these, the colonial pipelines, after a computer hacking earlier this year led to rising prices and fuel shortages on the East Coast.
Although the flow of fuel through beach platforms and railways could cause flooding or prolonged power outages in just a few days, it could keep filters and pipelines offline, which could increase gasoline prices, Cloza said.
Another potential disruption may come from consumers themselves. Shock at the pump when the colonial pipeline closes in May exacerbates inflation and shortages.
“We have to look at the bad behavior of people,” says Cloza. In any case, the week of high demand is one week before Labor Day.
Strengthening for price increases
The worst week-long increase in the last 30 years Hurricane Katrina followed in 2005. The average price of a gallon of regular gas rose 46 cents or 18% to $ 3.07 a gallon. After that storm, it took two months for gas prices to return to pre-Katrina levels.
But such a whirlwind is far worse. A.D. In 2005, many refineries in the region were flooded and had no power for months, Cloza said.
The biggest impact on gas prices could be in the southeast, he said. All states in the region today have an average price of less than $ 3 a gallon.
Another reason for this could be a recent meeting of OPEC oil ministers with Russian officials and several other major oil producers.
Concerned about inflation, Biden’s management has been pressuring partners to agree to increase production. The group was expected to agree to an additional 400,000 barrels a day. But Reuters reports that Kuwait’s oil minister’s comments on Sunday suggest that such an increase is needed in the wake of the escalation of the VV-19 crisis, which could reduce economic activity and oil consumption.
“Markets are declining,” Mohammed Abdullatif al-Fares told Reuters on Sunday. In some areas, Kovid-19 has started the fourth storm, so we need to be careful and reconsider this increase.