Posts tagged “gas shortages”
As Hurricane Sandy bears down on the East Coast, a lot of prognosticators are offering up predictions for what it means for gasoline prices in that market. I thought it might be of interest to note the differences in Hurricane Sandy and Hurricane Katrina concerning the oil and gas markets.
Hurricane Sandy has already reduced refining capacity in the Northeast, and the possibility exists of extended outages if any of these refineries take significant damage from the hurricane. Gasoline and heating oil inventories in the area were already very low, and this increases the chances of sharp gasoline spikes across the area. However, these spikes are expected to be short-lived and localized, as the area also receives gasoline from Europe and from the Colonial Pipeline, which brings supplies to the East Coast from the Gulf Coast. As long as refinery outages are not prolonged, the gasoline markets should return to normally fairly quickly. However, people would be wise to make sure their cars are topped off with gasoline and that their heating oil supplies are adequate.
Hurricane Katrina presented a double-whammy for the oil and gasoline markets. When it tore through the Gulf of Mexico, it seriously damaged a lot of oil producing infrastructure that is critically important for the U.S. fuel supply. When Katrina made landfall, it damaged a number of refineries. The result was a shortage of oil capacity — which drove oil prices much higher — and a shortage of gasoline both from the oil shortage and the refinery outages. The oil capacity problem could not be quickly resolved, and as a result oil and gasoline prices remained higher for months. Because the Gulf Coast refineries supply gasoline to many markets, these high prices impacted the entire U.S. market. CONTINUE»
At this year’s ASPO conference, I was twice asked about the gasoline supply situation – once at a panel session and once by a reporter. At the time, there were gas shortages throughout the southeast, and some of the speakers gave the impression that this was the beginning of the end: Gas shortages are here to stay, and we are on the verge of the entire country running out of gasoline. There were a number of predictions along the lines of “It’s going to get a lot worse before it gets better.” While first discussing the source of the gas shortages – low inventories followed by a hurricane that sidelined a significant source of refining capacity – I answered the… Continue»
This looks ominous: Gasoline Inventories at Lowest Levels Since 1967. Source: This Week in Petroleum Of course we used a lot less gasoline in 1967, so on a ‘days of supply’ basis, this is probably the lowest level ever. I just got back to Dallas from the ASPO conference, and we are having shortages here as well. My cab driver said he had been to several stations that had no gas, and my wife told me that the Texaco near our house is out of premium. Someone asked during a panel discussion at ASPO whether we were going to have rationing by price. I answered that we are having that now. But prices aren’t going up nearly as much as… Continue»