Tropical weather and gas prices

<div class="meta image-caption"><div class="origin-logo origin-image none"><span>none</span></div><span class="caption-text">Residents fish along a dam&#39;s drainage system near Havana, three days after Hurricane Ike hit the island Wednesday, Sept. 10, 2008. Forecasters said Ike, a category 1 storm, could become a major Category 3 hurricane before slamming into Texas or northern Mexico on Saturday. &#40;AP Photo&#47;Fernando Llano&#41;</span></div>
September 10, 2008 4:51:35 PM PDT
With a string of hurricanes blowing through the gulf over the last few weeks, oil production has been up and down from the offshore rigs. And that can play with gas prices. TRACK IT: Location/forecast track | Satellite | Computer models | Watches/warnings | Hurr. wind probabilities | TS wind probabilities | Tracking map | Get Ike text alerts | Gulf water temps | Tim Heller's blog | Before the storm | Supply list | Photos

It has turned into a busy tropical season, which under the right circumstances could mean a big change in what we pay for oil and gas. Right now, the national average for gasoline sits at $3.67 a gallon. And on Wednesday at the end of trading, oil closed down slightly at $102.58 per barrel. That's impressive considering there's a storm in the gulf. And there's a reason for it.

We know from experience that hurricanes can wreak havoc on our energy needs. After Rita and Katrina, we saw platforms and refineries damaged and down, costing us up to 4 million barrels of gasoline every day. Supply went down and prices went up.

"There was damage and there were some platforms that never came back online," said Bob Tippee with the Oil and gas Journal.

But Tippee says so far this season, we've been relatively lucky. Gustav did not damage any gulf platforms or refineries. And Ike appears as though it will miss the bulk of the infrastructure. The only concerns are the evacuations from the rigs and temporary refinery shutdowns.

"We're talking a million barrels of day of production from the Gulf of Mexico of oil production and that's 20 percent of U.S. total production," said Tippee.

But even more important to oil prices and to gas prices at the pump than the currents and climate in the Gulf is the current economic climate in the energy world. Supply is up and demand is trending up at a slower rate, which means even a nasty hurricane likely will not affect oil prices in the way it could have.

"We have seen the market turn this summer in a fundamental way," said Tippee. "And that's good news for consumers."

The Gulf coast between Louisiana and Texas is home to the greatest concentration of refineries anywhere in the world, which means the industry always holds its breath this time of year. But as they say in the business, the consolation is that one hurricane never gets it all.

Keep your family safe this hurricane season. Check our complete tropical weather preparation guide


Load Comments