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Tuesday, Apr 23, 2024

Hurricane Ida brings 'nightmare scenario' for gas prices

Hurricane Ida brings 'nightmare scenario' for gas prices

Hurricane Ida could create a "nightmare" scenario for national gas prices, according to a market analyst.
Ida made landfall on Sunday as a Category 4 hurricane near Port Fourchon, Louisiana, which helps to produce around 18 percent of the U.S. oil supply. Port Fourchon also has a role in 90% of the Gulf of Mexico's deepwater oil production and is a base for more than 250 companies.

The devastation the hurricane is bringing will have a number of knock-on effects for markets in the next few weeks. Phil Flynn with the Price Futures Group told FOX Business that the storm was on track to hit over a dozen refineries with production capacity of more than 2 million barrels of oil.

"I expect the track of the storm could add anywhere from $.05 - $.10 a gallon," Flynn said, noting that might be a best-case scenario. He predicted that flooding, power outages and possible extended periods of downtime will add to the 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."

Flynn highlighted another potential problem for export hubs such as New Orleans, which sits at the mouth of the Mississippi River – a trade route that still represents some 500 million tons of shipped goods per year.

Previous storms have caused similar changes to gas prices: In 2017, Hurricane Harvey wrecked parts of Texas and forced eight refineries to close, which pushed gas prices up an average of $.10, according to Forbes. A winter storm in early 2021 pushed gas prices up about $.06.

Patrick De Haan of app GasBuddy cautioned residents in Louisiana to avoid rushing to fill their tanks ahead of the storm as such action could cause an even greater shortage of gas and a larger bump in price.

"Louisiana gasoline demand up sharply yesterday, over a 25% gain versus the average of the last four Thursdays," De Haan tweeted last week.

Instead, "motorists should prepare by reducing their gasoline demand as much as possible, and use the fuel for evacuations as necessary," De Haan said.
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