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News Article

Gasoline Prices Up Due to Hurricane Ida

By Antonio Trujillo | Wed, 09/01/2021 - 09:41

Hurricane Ida, which made its way through the Gulf of Mexico during the weekend, has caused severe damages to infrastructure. It shut down close to 95 percent of oil production operations in the area and companies are left assessing the damages while oil prices rise due to processing cuts. 

As was expected, prices are rising once again just like they did last week. Ida’s damages have been qualified as “catastrophic,” and loss of power and the time needed to repair and restart the energy facilities could easily amount to three weeks in the US’ coastal Gulf regions. GasBuddy has informed gasoline prices could go up anywhere from 5 to 15 percent; the real number may change depending on how quick operations in the Gulf can be restarted.  

Given that 17 percent of crude oil production and 45 percent of all US oil production capacities lie along the coast of the Gulf, Hurricane Ida was sure to wreak havoc, and affect the industry and hit users alike. The US Bureau of Safety and Environmental Enforcement (BSEE) said that 95.6 percent of oil production and 93.7 percent of gas production in the Gulf had been interrupted or shut down in response to the hurricane and 100 percent of structures (rigs) in the area had been evacuated, while up to 51 percent of offshore platforms had their personnel evacuated as well. 

Oil experts have highlighted the severe consequences a hurricane Category 4 represents for the industry, and Ida undoubtedly fits this description. In fact, the path of the hurricane is “one of the worst possible for the oil industry,” one where crucial infrastructure, like pipelines that transport production as far as the east coast of the US, is located. In addition, Hurricane Ida came at an already harsh time for production in the Gulf given PEMEX’s recent platform fire, where five people died and two people have been declared missing. 

Though responses were quick, the BSEE activated Hurricane Response Teams as early as Saturday for one, production was in inevitable risk of halting throughout the duration of the present weather conditions. Facilities that see their infrastructure the least affected need to go  back online as soon as possible, as stated by the BSEE. Nevertheless, in order to get operations going back again in the affected ones, companies will not only have to transport personnel back, but also assess and repair all damages in what is a notoriously lengthy process. 

On Friday, MBN reported on the numerous oil companies operating in the Gulf of Mexico that have shut down operations due to safety concerns, as then-tropical storm Ida was entering the area, threatening both workers and facilities lying in the path of the storm. All major companies-initiated evacuation protocols, either flying their workers to safety onshore or by stationing vessels. BHP and BP were the first to shut down operations completely; others, like Exxon Mobil, prepared by readying their facilities for extreme weather conditions; the rest stated that measures would be taken according to the evolution of the phenomenon. 

The data used in this article was sourced from:  
SPGlobal, Reuters
Antonio Trujillo Antonio Trujillo Junior Journalist & Industry Analyst