5 Ways Hurricane Season Can Drive Oil And Gasoline Prices
Ellen Wald, PhD | Sep 06, 2018 19:30
We are now entering the most active months of the hurricane season in the Atlantic Ocean. Even though weather scientists are shortages across the state days before the storm arrived. Most of Florida’s gasoline is brought from refineries in Texas and Louisiana via barge across the Gulf of Mexico and then sent east across the state in a single pipeline. Florida, the country’s fourth largest state, is particularly susceptible to gasoline shortages.
When superstorm Sandy hit New Jersey and New York in 2012, gasoline shortages were evident across the region and prices at the pump for consumers jumped before state governments implemented rationing plans. However, the storm was hit by hurricane Felix but the refinery was not damaged.
Unless a hurricane is unusually destructive or flooding is particularly acute, most of these issues can be resolved within a week of an event. Some issues, like gasoline shortages or excess oil in storage areas can linger.
The key point for market watchers and traders to realize is that with hurricanes, there is no uniform consequence. The price of WTI may rise if rigs are shut down or it may fall if the EIA reports an unanticipated build in crude oil storage. (Of course, Brent prices are generally undisturbed by hurricanes in the Gulf of Mexico or the U.S. coast).
As well, gasoline prices may jump for consumers but futures contracts may fall, depending on which areas are most sharply impacted by the hurricane. Each hurricane effects the markets a little differently, so it's essential to keep abreast of the details.
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