Lima drivers could see fuel prices climb in the coming days as Hurricane Isaias, a major storm barreling toward the Gulf Coast, threatens to disrupt refinery operations, according to industry experts. While the hurricane is forecast to bypass the oil industry’s largest production hubs along the Gulf, its potential to trigger power outages and shut down refineries could tighten fuel supplies.
Any extended disruption to refining capacity would further strain fuel supplies, which have already been affected by the ongoing conflict in the Middle East and Russia’s war against Ukraine, as reported by industry experts.
Specifically at risk are Chevron’s facility in Pascagoula, Mississippi, and Vertex Energy’s refinery in Mobile, Alabama, which together process 2.4% of the nation’s refining capacity. Andrew Lipow, a Houston-based oil analyst, noted these facilities face risks of flooding and power outages, which could take them offline. Diesel supplies are already low, making any problems particularly impactful.
Hurricane Isaias strengthened into a major hurricane on Friday, moving toward the Gulf Coast where preparations were underway for potentially life-threatening storm surges and high winds.
The extent of price increases depends on the storm’s speed and impact. Carl Larry, with the energy analysis firm Enverus, suggested that if the storm passes quickly with minimal impact, refineries might continue to operate at reduced capacity, leading to gasoline and diesel price increases of "just a few cents." However, Larry warned that a complete shutdown of refineries, such as Chevron’s, could lead to weeks of recovery time and significantly higher fuel prices. He stated that "Major issues, like a power shutdown," would cause prices to "spike immediately," potentially by "a dollar." Diesel prices, already above $6, "could start approaching $7," Larry added.
Other experts, however, believe the impact on gas prices might be minimal even if refineries are affected. Patrick De Haan, head of petroleum analysis at GasBuddy, indicated that the potential impact on refining capacity could be "under a million barrels a day, probably somewhere in the ballpark of 500,000 barrels a day." De Haan added that this might have a small impact primarily on the Gulf Coast, but he does not believe it would "impact gas prices nationally."
Isaias has already caused widespread shutdowns in offshore oil production across the Gulf region, which typically supplies about 15% of U.S. crude. The federal Marine Minerals Administration reported that personnel from 121 production platforms, roughly a third of the facilities in the Gulf, were evacuated. The agency also stated that nearly two-thirds of oil production, equivalent to almost 1.3 million barrels (54 million gallons) per day, was shut down. Companies including Chevron, BP, and Shell confirmed they had evacuated personnel and closed platforms.
Despite these significant shutdowns, De Haan anticipates that the shut-in oil production will likely return "pretty quickly within just a couple of days," assuming there isn't substantial damage. The storm’s effect on oil and gas prices is currently overshadowed by the broader impact of the conflict in the Middle East. On Friday, Brent crude, the international standard, traded above $104 a barrel, a price that has fluctuated between $96 and nearly $110 over the past month, driven by uncertainty over the war with Iran.
