"Certainly for the local area that gets hit, it's going to be disruption on all businesses, including gasoline sales," Burkhard said.
That led to gasoline shortages, panic buying and long lines at service stations throughout Texas. In 2017, Hurricane Harvey stalled over Houston, dumping so much rain that flooding knocked out nearly a quarter of the nation's refining capacity. Refineries built in hurricane regions may have reinforced their facilities after prior hurricanes to withstand the storm, but it's likely that there will be disruptions to some major refineries, Burkhard said. Six refineries, which together have a refining capacity of about 2.2 million barrels per day, were shut down, including refineries operated by Valero, Total and Citgo. More than half of US refining capacity is built along the Gulf Coast, where the storm is heading. Producers outside the region can pick up the slack. While some oil production is temporarily suspended, experts say it's unlikely to cause problems for supply in the US There has been a surplus of oil production this year, and demand for fuel is still well below pre-pandemic levels. "Platforms out in the Gulf can be damaged, the refineries (mostly in low-lying land) can be flooded, especially if a storm lingers around for days like Hurricane Harvey did in 2017." "Risk level is high," said Stewart Glickman, energy equity analyst at CFRA, in an email. The Gulf region usually produces about 15 per cent of the oil in the US Producers also shut in about 61 per cent of the natural gas produced in the Gulf. Producers shut in 84 per cent of the oil produced in the region, taking about 1.6 million barrels per day off the market. Nearly half of the oil and gas platforms in the Gulf of Mexico - almost 300 - were evacuated by Wednesday, along with most of the offshore rigs. "There is a buffer, but we still have a couple weeks left in the summer of higher demand, so we could see the surplus come off pretty quickly." "Inventories have been getting tighter through the summer," said Peter McNally, global sector lead at Third Bridge, an investment research firm. But with higher demand that typically comes with summer, there could be some disruption. This year, 60 oil and gas companies filed for bankruptcy protection, according to law firm Haynes and Boone.Įxperts say it's unlikely that the US will suffer from major oil or gasoline shortages due to the hurricane, as other regions fill in the gaps or turn to stored oil. Benchmark US crude was selling for about $43 a barrel Wednesday, while gasoline was selling for about $2.20 a gallon, according to AAA. Oil prices have recovered somewhat, but are still well below what most producers need to stay in business. At the same time, OPEC was flooding the market with crude, aiming - with success - to put American oil producers out of business. The oil industry was already hammered since the start of the year, struggling with low prices after the coronavirus decimated demand. Oracle Utilities: Turn raw data into a powerful information.The Economic Times Power Talks Presented By GE.
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