The Peak of Hurricane Season

Hurricane season generally lasts from June 1st through November 30th. Typically, we will not start to see its impact until August which will usually peak into September. Why is this important to know and how does it pertain to the energy industry? In the past, hurricanes have caused billions of dollars’ worth of damage especially along the gulf and Atlantic coastal regions. Its storms impact the infrastructures, power grids, as well as the production of offshore drilling, which can cause major fluctuations in the oil and gas industry.

The gulf and Atlantic coastal regions account for 45% of U.S oil refining, with capacity of 17% oil production. A serious hurricane can have the ability to shut down production facilities for days to weeks at a time. Even if a hurricane turns out not to be as serious as it is anticipated, the speculation will still drive the market. An example of this is Hurricane Florence from 2018. Hurricane Florence had no impact on production but fears caused light crude to increase by 2%. Hurricane Harvey of 2017 on the other hand, had a more serious effect. It caused roughly a quarter of shut down at oil refining operations in the U.S. This caused gas prices to increase 7% in just a span of a few weeks.

As of right now we are dealing with Tropical Storm Isaias. It is currently 120 miles southeast of Cape Canaveral Florida and is moving northwest at a speed of 8 mph. Its center is expected to reach 25 – 30 miles offshore. Although it is not expected to reach hurricane standards, it still can produce 65 mph winds which can cause damage to infrastructure and have delays on refinery production. Though not as bad as 2017, it still is a humbling reminder of what this time of year brings.

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