Folks, I almost spilled my coffee reading this one. Tropical Storm Isaias is barreling down on America’s refining nerve center, and I’m thinking, “Can’t we just get a break?” The global energy system is already on the brink, and this storm is the last thing we need. I mean, we’re talking about a perfect storm of problems here – war-driven outages overseas, Ukrainian drone attacks in Russia, and export restrictions in China. It’s like the whole world is conspiring against us to drive up fuel prices.
The storm is expected to hit just east of New Orleans, a major refining hub, and that’s got everyone on edge. I’m no expert, but even I know that refineries in the Gulf Coast are running at full capacity to offset those overseas outages. And now, we’re facing the possibility of refineries shutting down or slowing down due to the storm. It’s a nightmare scenario, folks.
According to Robert Yawger, director of energy futures at Mizuho Securities, this could be a “gigantic event” – the worst time for something like this to happen in 25 years. I’m not sure what’s more terrifying, the storm itself or the potential impact on our already-strained energy system. The actual impact will depend on the storm’s path and intensity, but I’m not holding my breath.
Current forecasts call for the storm to hit just east of New Orleans, but if it seriously weakens or veers further east, vital energy infrastructure could be spared. Let’s keep our fingers crossed, shall we? The risk is still there, though – the storm’s damage could squeeze supply chains even more, further raising historically high prices. I mean, gasoline was already over $4.40 per gallon last week, and diesel prices have catapulted to all-time highs.
About 2.7 million barrels per day of America’s refining capacity lie within or near the projected path of the storm, according to Andy Lipow, president of Lipow Oil Associates. That’s a significant chunk of our refining capacity, folks. And if refineries in the New Orleans/Baton Rouge and Mississippi/Alabama regions have to slow down or shut down, it’s going to be a disaster. The Strategic Petroleum Reserve has already been aggressively drained to ease the energy shock, and now it’s at its lowest level since 1982.
It’s not just the refineries, either – tankers delivering oil to refineries and loading fuel out of refineries could get delayed, which would particularly impact Florida. The state relies on shipments of fuel from the Gulf Coast, and any disruption to that supply chain could be catastrophic. And let’s not forget the impact on commercial inventories, which have already been whittled away. Gasoline stockpiles recently fell to their lowest seasonal record since 2012, and distillate inventories are at their lowest level for early October since tracking started in the early 1980s.
Refineries in the Middle East have been damaged by the Iran war, or have struggled to get shipments out to the rest of the world. Refineries in Russia have been destroyed or damaged by drone attacks, and China has restricted its exports. US refineries are one of the remaining key sources for the global fuel supply, and if they have to come off the market, it would be a disaster. It would basically force a diesel export ban, according to Yawger.
The intensity of the storm will play a huge role in determining the impact, including the severity of flooding and wind damage. Isaias could peak as a Category 2 storm with 110 mph winds by early Friday, and that’s got everyone on edge. It can!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Armchair patriot. Believes in the free market, cold beer, and that there’s always a guy named George behind every CNN segment.
Former remote-throwing champion turned #1 couch commentator on liberal panic in the media. Born in Texas (or so his mug says), he earned a degree in Fake Newsology & Beer Philosophy from YouTube University.
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