Hurricane Harvey has not only left it’s mark on homes, businesses, and entire communities, but also on the oil industry.
With Mississippi, Texas, Louisiana and Alabama in the heart of the oil refinery industry, when a storm hit, production stops. That’s when gas prices start to rise.
According to Energy Information Administration (EIA) statistics in 2015, this area accounted for over 50 percent of U.S. refining capacity and Federal waters in the Gulf of Mexico accounted for about 18 percent of the oil and 5 percent of total natural gas production.
This area is also no stranger to natural disasters like hurricanes. Therefore the American Petroleum Institute has developed standards to ensure the safety of personnel, and stability of the market.
“While Texas and Louisiana have shown resilience following Harvey, there are still challenges ahead and protecting the safety of workers, their families, and the communities in which they live and operate is our top priority,” said Kyle Isakower, with the American Petroleum Institute.
When a hurricane strikes it is important to understand how the environment is affected especially around the Gulf of Mexico. Days before a storm hits companies will evaluate the situation and decide whether or not to evacuate personnel and potentially relocate drillships to a safer location. When the storm passes, “flyovers” are conducted on and offshore to evaluate the damage. Then they begin to address safety concerns and send an assessment crew out.
If things look acceptable, operators will begin production again and drilling rigs will start back up. Even if no damage is detected, operations can’t always begin immediately.
“Energy is critical to running our schools, hospitals, and homes and the women and men in the oil and natural gas industry are making every effort to get our remaining facilities back up and running,” said Isakower.
The Energy Information Administration (EIA) reported that data indicates half of the gasoline used on the East Coast and about one quarter of the crude oil run in refineries in the Midwest and are shipped from the Gulf. The country relies on these pipelines to deliver oil and refined petroleum reliably.
When a hurricane disrupts refinery or pipeline operation, the combination of immediate loss of gasoline and diesel production and lack of demand for crude can result in a two-tier market and the price on fuel can rise, while the price of crude oil can fall.
The Federal Emergency Management Agency said any consumers in the path of a hurricane or tropical storm should have a safety plan for evacuation and how to secure their home. They are reminded to conserve energy use in homes and maintain regular buying habits for their vehicles, which can help alleviate a sudden surge in demand.
