June 9, 2024
Hurricanes and tropical storms can absolutely impact gas prices. But after seeing what they’re predicting for this year’s hurricane season, spoiler alert predicting the worst season in two decades — the government is warning of a serious “risk” to US oil production – which obviously would jack up gas prices.
Ok – so let’s start with the 2024 hurricane forecast. The Atlantic hurricane season runs from June 1st to November 30th. The National Oceanic and Atmospheric Administration’s National Hurricane Center is predicting above-normal hurricane activity this year with between 17-25 total named storms, eight to 13 of those are expected to become hurricanes, and of those four to seven are expected to be major hurricanes of categories three four or five.
Last year – there were 20 named storms but only one hurricane made landfall in the US. But because of where it hit it had no impact on oil production. But the Energy Information Administration is warning that’s probably going to change this year.
Why? Well, because the storm prediction numbers are higher and according to the EIA most of the offshore crude oil in the United States is concentrated in the Gulf of Mexico. There are oil rigs and refineries all around that area. In fact – almost half of the oil refining production for the entire United States is located right here along the Texas and Louisiana gulf coast. These facilities are responsible for refining millions of barrels a day. And guess where lots of the hurricanes like to go? Right in these warm gulf waters and onto this surrounding land. And when these hurricanes come through they can knock these rigs and refineries offline for days, weeks or even months.
You can see here in 2006, 2008 and 2021 when hurricanes Katrina, Rita, Gustave, Ike and Ida hit there was a big drop in US crude oil production.
Obviously no one can predict where hurricanes will ultimately make landfall especially not this far in advance. But the EIA is making an educated guess based on the National Hurricane Center’s above average storm prediction for 2024 that at least one of these storms is going to impact at least one of these u-s oil facilities.
If that happens not only does it grind oil production and refining to a halt – which impacts the supply of oil and gas and the supply chain– but hurricanes affect demand – especial for the people in the path of the storm. You often see their consumption spike up because they’re worried there will be a gas shortage so they over purchase gasoline. And all that contributes to higher gas prices both locally and nationwide.
Read the warning from EIA here.
Read the National Hurricane Center 2024 Hurricane season forecast here.
