Hurricane Ida is likely to lead to some increase in gasoline prices, but nothing dramatic, analysts say.
Oil prices have not surged despite Ida forcing the shutdown of 96% of oil production and 94% of natural gas output in the U.S. Gulf of Mexico. Oil prices are the biggest contributor to prices at the pump.
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At least nine refineries in Louisiana have reduced production or shut-in operations in response to the storm, together accounting for about 13% of the total U.S. refining capacity, according to the Department of Energy.
The Gulf is normally home to 16% of U.S. crude oil production, 2% of its natural gas output, and just over half of the nation’s refining capacity.
Several pipelines have also shut down operations as a precautionary measure, including some of the Colonial Pipeline, the key hub for transportation fuels that was hit by a cyberattack in April, which halted deliveries across the Southeast and lead to panic purchases of gas.
But refinery and oil and gas shutdowns are not anticipated to cause any immediate supply issues, the Energy Department said, because Gulf Coast stocks of gasoline and diesel are above or essentially in line with the five-year average.
Colonial Pipeline said Monday it expects to resume full service once it assesses the storm effects. Colonial said fuel supply is available throughout the Southeast from numerous terminals located along its network.
Average national gasoline prices could rise in the 5-10 cents per gallon range over the next two weeks, according to GasBuddy analyst Patrick De Haan.
“Hurricane Ida isn’t likely to lead to drastic price increases, but some increases are likely over the next ~2 weeks,” he said.
That relatively small increase would represent a sigh of relief to the Biden administration, which has been on the defensive this summer over rising gasoline prices caused mostly by oil prices increasing as demand returned with recovery from the pandemic.
This month, the administration called on OPEC and its allies to pump more oil in order to counter rising gasoline prices as it seeks to address criticism that its big spending proposals are causing inflation.
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But prices have fallen in recent weeks due to concerns over the spreading delta variant, providing cushion against any price increases that might occur from Hurricane Ida.
