Folks, I almost spilled my coffee reading this one. Hurricane Isaias is heading straight for the US Gulf Coast, and let me tell you, the timing couldn’t be worse. The global energy system is already on edge, with almost no margin for error. I mean, can you believe it? The world is relying on US refineries to process as much oil as possible to make up for a fuel supply crunch caused by war in the Middle East and Russia. It’s like the perfect storm, no pun intended.
The biggest risk, of course, is that extreme flooding, wind, or power outages from the Category 3 storm will disrupt, damage, or even destroy refineries. And let’s be real, the thought of refineries shutting down, even for a few weeks, is enough to cause a big price hike in gas, diesel, and jet fuel. I mean, analysts are warning that even a small disruption could have outsized price consequences. Bless their hearts, they’re trying to prepare us for the worst.
As Tom Kloza, chief energy adviser at Gulf Oil, said, “There is zero tolerance for any disruptions right now.” I don’t blame him; the current path of the storm has veered far enough to the east that it could spare most, though not all, Gulf Coast refiners. But still, the risk is there, and we should be worried. The Chevron facility in Pascagoula, Mississippi, and the Vertex facility in Mobile, Alabama, are at significant risk from the storm, and if they go down, it could be a disaster.
Now, I know some of you might be thinking, “But what about the refineries in Louisiana?” Well, thankfully, they’re expected to avoid the worst of the storm. However, the Chevron and Vertex refineries are a different story. They process a combined 466,000 barrels per day, representing about 2.4% of the nation’s refining capacity. That’s a significant chunk, folks.
The big question is whether extreme flooding or power outages in the region will force these refineries to shut down for a significant amount of time. And let’s not forget, it can take up to two weeks to fully restart refineries even if they avoid damage. Severe flooding can put a refinery out of commission for months, as we saw with Hurricane Ida in 2021.
As Kloza said, “I don’t think the hurricane is going to knock out these two refineries. But you do have to worry about the utilities. If you don’t have power, you can’t operate. That’s the biggest threat.” I couldn’t agree more. And with commercial inventories of both gasoline and diesel historically low for this time of year, we’re looking at a perfect storm of price hikes and shortages.
Hurricane Isaias has already disrupted oil production in the Gulf of Mexico, with about 72% of the daily Gulf of Mexico oil production shut in as a precaution. Assuming there’s no damage, those facilities should be able to resume production in short order. But still, the delay in getting gasoline and fuel to Florida, a state that relies heavily on shipments from Gulf Coast refineries, is a concern.
In conclusion, folks, this is a story that’s got it all – hurricanes, oil refineries, and price hikes. It’s like a recipe for disaster. But hey, at least we’re prepared, right? As I always say, you can’t make this stuff up. And on that note, I’m going to go fill up my gas tank, just in case. 😊
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.
⚖️ ENTER THE LEGALIZER
Think the government has no idea what it's doing? Put your case before the Federal Case Terminal and find out.
