Market analysts have joined meteorologists in the search for information about the reach of Hurricane Isaias, which was classified as a hurricane this Friday. The reason is that along the path of the phenomenon formed in the Gulf of Mexico lies part of the United States’ oil production and refining. This is likely to put more pressure on fuel prices, in a week when Brent crude rose above US$100 per barrel again.
According to the National Weather Service (NWS), Hurricane Isaias is expected to reach the northern Gulf coast late this Friday (the 9th) or early Saturday (the 10th). The storm has sustained winds of more than 190 kilometers per hour.
Read more: Isaias, first Atlantic season hurricane, advances toward Florida
Life-threatening storm surge is expected along the coast, with damaging wind gusts that are expected to extend inland. Heavy rainfall is forecast across much of the southeastern United States.
The fear is that the storm’s effects could push fuel prices higher if outages occur that paralyze crude oil processing refineries, according to industry experts interviewed by the AP.
The explanation is that a prolonged shutdown of refineries would hurt fuel supplies that have already been affected by the ongoing conflict in the Middle East and by Russia’s war in Ukraine.
Diesel and Gasoline Prices
According to the daily tracking by the American Automobile Association (AAA), the average price per gallon of gasoline in the US stands at US$ 4.3718 this Friday. The figure is below the US$ 4.3961 seen last week, but above the US$ 4.2245 from a month ago. Or the US$ 3.1106 from a year ago.
And this is the average price – in California, the per-gallon price has been above US$ 6 for several weeks.
On diesel, the situation is even more critical. The average price per gallon in the US surpassed the record mark of US$ 6 in early September – it is at US$ 6.2785 today.
That is where attention turns to the trajectory and intensity of Isaias. Carl Larry, from energy analytics firm Enverus, told AP that if the storm passes quickly and has a reduced impact, refineries would continue operating at reduced capacity and gasoline and diesel prices could rise only a few cents. However, if refineries like Chevron’s shut down completely, it could take weeks to recover.
And that could cause fuel prices to rise more significantly. If there are serious problems, such as a power outage, prices would spike immediately, Larry said. “Prices could rise by a dollar. Those diesel prices already above US$ 6 could begin to approach US$ 7,” he warned.
In addition to the Chevron facility in Pascagoula, Mississippi, the Vertex Energy unit in Mobile, Alabama is also on flood and outage alert — both account for 2.4% of the country’s refining capacity.
Because of this small share in the overall picture, other experts argue that the impacts on gasoline prices could be small and localized. “I don’t think it reaches a threshold that would impact national gasoline prices,” Patrick De Haan, head of petroleum analysis at GasBuddy, told the news agency.
If there are doubts about refining, production, the impact tends to be greater. It is estimated that by this Friday the storm had already caused the temporary shutdown of offshore oil wells that pump about 15% of the US crude oil. News agencies reported that staff from 121 production platforms — about a third of the Gulf of Mexico’s facilities — were evacuated.
