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The Impact Hurricanes have on the Industry

Hurricanes can result in catastrophic damage, not just to people’s lives and communities, but also to different industries and the economy.  For the context of this blog, we look into how hurricanes impact the oil and natural gas industry.

Hurricane season

The main hurricane season lasts for six months, usually from June to November. Within that six months there is a peak period in August through October. This peak period exists because wind shear–which prevents storms from forming–decreases, while warmer ocean temperatures cause storm activity to increase.

The most powerful storms that hit the United States tend to brew in the Gulf of Mexico and Atlantic Ocean. Not only have these powerful storms caused billions of dollars in damages over the years–impacting housing, damaging land etc. Additionally, they have impacted the oil and gas industry by causing a fluctuation in prices.

Pricing impact

The Gulf Coast accounts for 45% of the United States oil refining capacity, 17% of its oil production and 5% of natural gas production. If a hurricane was to hit the Gulf Coast it could shut down those capabilities for days or even weeks. In the aftermath of a hurricane however, gasoline and diesel prices tend to spike. These spikes in price weren’t just contained to the Gulf coast region. Instead, prices across the United States all raised significantly higher.

For example, when Hurricane Harvey hit roughly a quarter of the US oil refining activity ceased. This resulted in a loss of 2.3 million barrels of daily processing capacity and gasoline prices increased by over 7%. Additionally, when hurricane Katrina hit there was a sharp jump in prices for unleaded regular gasoline. On Aug. 29th the price per gallon was $2.30, the day after the hurricane hit it jumped to $3.00 per gallon.

Pre and post hurricane

Since these oil companies are in the path of these tropical weather events, they closely track storms in order to protect their employees and facilities. In the event of a storm this allows them to be as prepared as possible. For instance, if a refinery is in the path of a large storm it could reduce or halt production to allow employees to evacuate.

Once the storm is over, depending on the conditions, refineries can be reopened very carefully over a period of two or three weeks. It’s also important to keep in mind that restarting a refinery doesn’t come with the flip of a switch. Instead, restarts are painstaking due to the thermal and chemical reactions involved in turning crude oil into fuel.

Contact Tiger General

Yes, hurricanes have had an impact on the oil and gas industry. But after being hit time and time again the industry has proved it’s capable of bouncing back.

Fill out the Tiger General Truck Inquiry Form today to get started on bringing your next piece of equipment to where it’s needed most.