Hurricane Ida May Not Raise Gas Prices for Long, Although Situation Is Desperate in Hard-Hit...
Hurricane Ida May Not Raise Gas Prices for Long, Although Situation Is 'Desperate' in Hard-Hit...
  • The storm known as Ida has devastated parts of Louisiana and could end up causing $80 billion worth of damage from flooding and strong winds.
  • Over 95 percent of the oil production in the Gulf of Mexico was at least temporarily shut down, and now the question is when it all comes back online. The fact that the region is still mostly without power will delay some reopenings.
  • The national gas price average was up three cents Tuesday, but one reason disruptions in the Gulf might not affect the numbers too much is because the U.S. now gets more fuel from other locations.

    The devastating floods and other damage caused by Hurricane Ida, the fifth-largest hurricane to ever make landfall in the U.S., could end up doing $80 billion worth of damage to New Orleans and southeast Louisiana. Sadly, the demand for gasoline by evacuating families and people fueling generators has led to a dire situation in the area, at least for now. The New Orleans Times-Picayne described the situation on Wednesday: "Motorists are prowling the streets, looking for fuel tankers to follow to the next gas station." The death toll and final damage estimates will not be known for a while. Meanwhile, other parts of the country outside of the hurricane's path might feel some impact of the storm when it comes to gas prices. Or they might not.

    With normal life disrupted in the area and only limited power available, oil and gas production has stopped in the local Gulf region. The federal Bureau of Safety and Environmental Enforcement announced Sunday that over 95 percent of all oil production in the Gulf of Mexico had been temporarily closed down when the storm arrived. AAA said the storm took around 13 percent of all U.S. refining capacity offline, and that four of the nine oil refineries in Ida's path were shut down at least temporarily. Colonial Pipeline also shut down two pipelines between Houston, Texas, and Greensboro, North Carolina, before the storm but restarted them late Monday evening. CBS News reports that some of the fuel terminals and refineries there have already restarted operations.

    The short shutdown means that gas prices may not climb as high as some analysts initially predicted, around five cents a gallon in the short term. AAA said the national gas price average was at its lowest point since early July over the weekend, but then climbed back up (just a penny) to $3.15 by Monday morning, after Hurricane Ida passed through. Early Wednesday, GasBuddy's Patrick De Haan tweeted that the national average rose three cents a gallon Tuesday to $3.18 a gallon.
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    "Until the power is restored, it's too early to know the full impact of any damage Ida caused on the oil and gas industry, but motorists regionally can expect price fluctuations leading into Labor Day weekend," AAA spokesperson Jeanette McGee said in a statement. "Typically, a Category 4 storm could mean three-plus weeks before refineries are back to normal operations, while offshore production is more likely to resume this week."

    One reason the hurricane is unlikely to create more volatility in gas prices is because the U.S. is less reliant on gasoline from the region, NPR noted, getting more fuel from parts of Texas and New Mexico instead. Companies operating in the region have also learned from past storms to protect vital equipment as much as possible, which shortens the time between a storm and restarting production.

    But refineries require electricity, and the region is still suffering from massive blackouts caused by the storm. So we don't want to celebrate too heartily too soon. We also want to wish the residents of the region all the best as they recover.

    Pictured at top: A petrochemical plant near Highway 61 in Norco, Louisiana, on August 30, 2021, after Hurricane Ida made landfall. Photo by Patrick T. Fallon/AFP via Getty Images.

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    date : 2021-09-02 16:01:53