Hurricane Ike: Get Ready For Soaring Gasoline Prices
Posted By Keith Johnson On September 12, 2008 @ 12:51 pm In Gulf of Mexico, Gasoline, Refining | 24 Comments
Hurricane Ike is bearing down on the Texas coast like an eerie reminder of the deadly 1900 storm that mauled Galveston, and represents a perfect-storm scenario of possible damage to vulnerable refining, chemical, and shipping industries.
As Ike’s Category-2 winds start pounding one-quarter of America’s oil-refining capacity, what’s the likely outcome in terms of gasoline prices and shortages? Reuters quotes one breathless meteorologist:
“Hurricane Ike is a gigantic Category 2 monster and is likely to generate a massive and particularly destructive storm surge at key refinery centers,” said Jim Rouiller, meteorologist with private weather forecaster Planalytics. “Close to 20 percent of the U.S. refining capability could be lost for a long period of time.”
But what’s a “long period of time”? The folks at The Oil Drum have been trying to divine how Ike’s storm surges and inland flooding could affect Texas’ refining capacity. In a nutshell, it doesn’t look good—with some outages potentially lasting the rest of the year:
The key question is refinery damage…Current models are showing that there will be at least 1 MMBBL offline for 30 days, with the potential for 5 MMBBL offline at 30 days and 4 MMBBL at 60 days, 1 to 2 MMBBL out through the end of the year. That would certainly cause
significant shortages of refined products (eg gasoline).
You don’t have to tell Houston drivers. On their way out of town, many have already run into long gasoline lines—and some service stations have already run out of fuel, thanks to the early refinery shutdowns prompted by Ike’s arrival.
If Americans thought $99 oil meant the end of $4 gasoline, Ike might just make them think again.
