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.
