Although oil firms are still reviewing the damage caused by Hurricane Ida to oil rigs, platforms, and refineries, signs indicate a limited impact on gasoline availability and prices. Although AAA has warned of price volatility, and numerous analysts foresee temporary price increases of a few cents, experts do not expect a significant or long-term market disruption. For example, gas prices instantly rose by 45 cents when Hurricane Katrina hit — precisely 16 years ago — and remained high for two months.
Hurricane Ida made landfall a strong Category 4 storm on Sunday night, knocking out electricity to over a million residences. The storm had swiftly strengthened, a situation that is becoming more typical due to global warming for tropical cyclones. Oil firms scrambled to evacuate people and shut down facilities in the Gulf of Mexico as Hurricane Ida approached, as is customary when a severe Hurricane comes.
The federal Bureau of Safety and Environmental Enforcement announced on Sunday that 95.65% of oil production and 93.75 percent of natural gas production in the Gulf of Mexico had been temporarily halted. Those are staggering figures. However, the main concern for oil markets is whether any infrastructure has been harmed. If that doesn’t happen, Gulf producers could resume drilling and pumping in a few days.
However, if the storms damaged the equipment, it may be down for a lengthy time. Companies are currently inspecting for damage. ExxonMobil states that its Hoover platform was not harmed and that normal activities are being resumed. Shell says three venues in the storm’s path are “all intact and on location,” but it doesn’t know when production will begin. Other operators, including BP and Equinor, believe it is too early to make a decision.