Some U.S. motorists who’d been expecting an end-of-summer relief for gasoline prices should start bracing for higher costs at the pump in the coming days due to Hurricane Ida.
Ida made landfall in Louisiana Sunday and is traveling along a path where seven fuel-makers process the equivalent of 12% of the oil refined nationwide. The Category 4 storm is expected to cause severe flooding and power outages that would slow the return to operations for those refineries, according to Andy Lipow, president of Lipow Oil Associates LLC in Houston.
“For a Category 4, you could be looking at four to six weeks or more of downtime for the refineries,” the analyst said.
The weakest link of a refinery is the cooling tower, which gets damaged by the wind. Ida is approaching the coast with top winds of 150 miles per hour. When Hurricane Delta hit as a Category 4 in October 2020, Valero Energy Corp’s refinery in Port Arthur, Texas, reported damage at the cooling tower associated with its crude unit. It took 12 days to finish repairs and bring the unit back on its feet.
If a refinery doesn’t sustain any damage, it can be back online in about a week, according to data compiled by Bloomberg. Last year, Royal Dutch Shell Plc’s Norco refinery in Louisiana had multiple units shut ahead of Zeta and after assessing the refinery for damages, safely restarted five days later. Phillips 66’s refinery in Lake Charles, Louisiana reported minimum damage and returned to operations in six days.
Motorists should expect to pay up at the pump. Prices may rise about a dime a gallon during the next four to five days in the southeastern and mid-Atlantic markets, Lipow said. The government, he said, may even consider waiving the Jones Act regulation, allowing foreign-flagged ships to transport gasoline and diesel between U.S. ports in a bid to tame retail prices.
The average gasoline price for the U.S. Gulf coast was $2.803 a gallon for the week ending Aug. 23, according to the U.S. Energy Information Administration.
Stuart Turley is President and CEO of Sandstone Group, a top energy data, and finance consultancy working with companies all throughout the energy value chain. Sandstone helps both small and large-cap energy companies to develop customized applications and manage data workflows/integration throughout the entire business. With experience implementing enterprise networks, supercomputers, and cellular tower solutions, Sandstone has become a trusted source and advisor. He is also the Executive Publisher of www.energynewsbeat.com, the best source for 24/7 energy news coverage, and is the Co-Host of the energy news video and Podcast Energy News Beat. Energy should be used to elevate humanity out of poverty. Let's use all forms of energy with the least impact on the environment while being sustainable without printing money. Stu is also a co-host on the 3 Podcasters Walk into A Bar podcast with David Blackmon, and Rey Trevino.
Stuart is guided by over 30 years of business management experience, having successfully built and help sell multiple small and medium businesses while consulting for numerous Fortune 500 companies. He holds a B.A in Business Administration from Oklahoma State and an MBA from Oklahoma City University.
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